Friday, August 27, 2010

SWKS Watch

Skyworks Solutions Inc. (SWKS) makes the electronic stuff that other companies use to make their consumer stuff. It moved to bull phase across the board today with a 6.9% price rise intraday and no visible news.

SWKS $18.36

The signals turned bullish today on the parbolic sar, Person's Proprietary Signal (pps) and the macd. The fast stochastic had given a bull signal on Aug. 16 and today moved above the 80-line.

The -- hate this word -- surge sent the price smashing like an armor piercing artillery shell through the 20-day moving average. The stock has been in a sometimes choppy uptrend since December 2008 and is also trading well above the 200-day ma.

The price rise was accompanied by increased volume, although hardly the top vol for the month.

My caveat is the company's business. The time I spent in Detroit in the 1980s helping cover the auto industry for AP showed me how difficult the life a supplier can be. Their business is described by Reuters as supplying products "supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and cellular handset applications."

That includes such times as amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure radio frequency (RF) subsystems, mixers/demodulators, phase shifters, power dividers/combiners, receivers, switches and technical ceramics.

So think the parts bins in the service department of your auto dealer, and you'll get an idea of where SWKS stands in the food chain. They supply the components to the household names, and that means to a certain degree they are vulnerable to being squeezed by the big gorillas that buy their products.

On the Person's chart, the rise pushed through the first upper weekly pivot (and set a low that came close to touching the lower pivot).

Person's Table
ppspps openupper pivotlower pivot
SWKS $18.36 $17.50 aug27 $18.59 $17.04

The chart since June has gone through some choppiness, and that creates an argument that today's move might be just more of the choppy same.

Reversal Levels
  • $19.29, +5.1% (swing high)
  • $18.51, +0.8% (nearer high)
  • $18.36 <== You are here.
  • $17.66, -3.8% (20-day ma)
  • $17.49, -4.7%
  • $15.54, -15.4% (200-day ma)
Bottom line: I like SWKS as a bull play, but it makes me nervous because of the choppiness. I would want to see how things played out when the inevitable pull back occurs. If it surives a retest of the 20-day ma, then it will look more like a decent trade. The supplier angle also makes me nervous. If I want electronics, I want to own the company that makes the device, not the guy who makes the phase shifter.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.
  • sto zone: green for bull phase, red for bear phase.

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