Does ASML's Potential Exemption From Chip-Making Restrictions Make It a Buy?
Let's size up the potential for this semiconductor stock.
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Shares of ASML Holding ASML , the Netherlands-based semiconductor tool maker, are rising after a report that the U.S. is close to making two technology giants exempt from new rules aimed at restricting China’s access to high-tech chip-making equipment. (Tokyo Electron is the other company mentioned.)
Let's check out the charts of ASML, with the stock up 7%.
In the daily bar chart of ASML, below, I can see that the shares have declined to retest the rising 200-day moving average line. Trading volume has been heavier in recent days suggesting that traders could be buying against the moving average line.
The On-Balance-Volume (OBV) line is still pointed down. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line. Prices have gapped up Wednesday and I would expect some of that gap to be filled.
In the weekly Japanese candlestick chart of ASML, below, I can see that the shares are testing the rising 40-week moving average line.
The weekly OBV line is pointed down but that might change in the weeks ahead. The MACD oscillator has been correcting lower since March telling me that the trend strength has been weakening.
In this daily Point and Figure chart of ASML, below, I can see Wednesday's rally and a price target in the $1,059 area.
In this weekly Point and Figure chart of ASML, below, I can see a potential downside price target in the $591 area. Big difference from the daily chart above.
Bottom-line strategy: I am not a fan of charts that change direction quickly. I like to see stocks make turns more slowly. Maybe ASML has made a low and will head higher but I am of the mind that more testing of the 200-day moving average line could be seen in the days and weeks ahead.
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