Daily Bull Chart: NXP Semiconductors
It's going to be hard to buy any high fliers here. Heck, it will probably be hard for many to buy anything right here. We've opened on the weaker side and have seen no signs of buying yet. That's probably a good thing for bulls in the short run. A failed push too early in the day could result in a very nasty afternoon and carry over into tomorrow.
Even if you don't want to buy, I would still have a watch list handy of potential breakout names if the market reverses or stabilizes here. NXP Semiconductors (NXPI) is one that looks worthy. I put this one up there with the two names from the weekly bull charts here.
NXPI is actually holding up well in today's market. The stock is knocking on resistance here at $107 and trying to avoid a double top formation. There is a longer-term three-month price pattern with a shorter one-month pattern contained in that three-month pattern. The longer-term pattern is a wide price channel bouncing between $95 and $107. Within that channel, we have a bullish channel about $5 wide in terms of pricing pushing higher off the late April lows. NXPI is a tough buyer here, since it is at one resistance level and close to another. However, if the stop gets above $107, then that should become the new support and adjust the risk-reward favorably for the bullish channel that will remain in play.
NXP Semiconductors (NXPI) -- Daily
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We are a bit overheated in terms of momentum here, as the stock is clearly in overbought territory. In terms of trend, though, it does signal a very strong bullish trend with potentially more upside in the cards. As we witnessed in February, momentum can stay overbought and the stock can run. What we want to watch is a weakening of the overbought momentum signals. That usually gives us a clue when a pause in price is very near. If that happens, then I would look to buy NXPI on a retracement to $103, but with a very tight stop as a close under $101 sets us up to retest $95.
The longer-term investment -- rather than trading -- picture is much more bullish in terms of price. Unless we see weekly closes under $95, the bullish trend is very much intact. Furthermore, a close over $107 sets NXPI bulls up for a run to $120. In mid-May, we saw a shorter-term bullish crossover on the slow stochastics for the weekly chart. This has been a pretty good buying point for traders. It hasn't been perfect, but the drawdown was only sizable once, while the other three times provided solid upside.
NXP Semiconductors (NXPI) -- Weekly
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NXPI is strong in terms of momentum, but not yet overbought. I would anticipate seeing it become overbought if the price pushes over $107, but just like the daily chart, the stock can still move much higher in terms of price in overbought territory, especially just upon initial entry.
A tough market to buy for sure this morning, but over $107, NXPI is going to be a tough stock not to buy regardless of the market here.
At the time of publication, Collins had no positions in the stocks mentioned.