Skyworks Solutions offers diverse standard and custom linear products supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and cellular handset applications. Skywork’s portfolio includes amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure radio frequency subsystems, receivers, switches and technical ceramics. It has aligned its product portfolio around two markets: cellular handsets and analog semiconductors. The handset portfolio includes customized power amplifiers and front-end solutions, from entry level to multimedia platforms and smart phones. Some of its primary handset customers include LG Electronics, Motorola, Nokia, Samsung, Sony Ericsson, Research in Motion, and HTC.
Earlier this week Skyworks Solutions released their earnings report for the 3rd quarter. After announcing a 48% increase in profits and guiding higher for the 4th quarter, Skyworks Solution’s (SWKS) stock rallied significantly on the news. Although the stock has declined about 30% from it’s high earlier this year, could the stock finally be ready to move higher?
Over the last 9 months, SWKS has created an important price level at $25 (green). You can see how even as far back as November the price of $25 has been an area of support or resistance whenever it is approached. After the release of SWKS’s earnings report earlier this week, SWKS broke back above the $25 level on extremely high volume, thus the stock should be moving higher from here. Commonly, stocks will reverse back to retest the levels they break. So, SWKS’s $25 level should act as support on any pullbacks.
The Tale of the Tape: SWKS (Skyworks Solutions, Inc) released their earnings report this week and the stock reacted positively to the news. After jumping through the $25 level, SWKS should be moving lower. Although a long position could be entered here, a lower risk entry could be made on a pullback to $25 if that were to occur. A stop below the $25 level would be advised either way. If SWKS were to break back below $25, the stock would most likely fall lower, thus a short position could be entered instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT