Last week was a remarkable one for the market in what was the biggest test of 2017. Stocks exhibited the kind of resolve that was clearly, for me, a buy signal. There’s no question it was a good dip for traders, and we took our cues and added five new stocks in my Smart Trader service.
We saw some follow-through on Monday as the market moved higher. The big winners included defense contractors, which led industrials higher (again), and semiconductor names helped technology put in another impressive session. Semiconductor stocks have traded well as a group, with the PHLX Semiconductor (INDEXNASDAQ:SOX) index gaining 12% in a little over five weeks.
We have a few open trades in semiconductor companies right now. One we just recently added is FormFactor, Inc. (NASDAQ:FORM), which deals primarily with testing wafers used in smartphones and tablets. It made a huge move a little over two weeks ago after earnings — gapping up 22% in one day, from $11.25 to $13.75.
FORM hit a high of $14.40 and has pulled back recently, but it’s now setting up for its next leg higher — it bounced 3.4% on Monday — which I expect will lift it back up through $14.40.
I wouldn’t be surprised to see FORM move closer to $16, so I see solid upside potential from here. On the downside, I would consider cutting it loose if it were to break below the low end of the gap from May 4.
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