Pullback About To Pop Higher?

At the end of last week, the semiconductor ETF (SMH) got hit hard.

Several stocks in that group had big down days. Some for good reasons, but others just got pulled down with the industry group’s bearish sentiment.

This creates an opportunity to find the next big mover in the semiconductor group.

This semiconductor stock is now ready to explode higher.

When SMH was selling off last Thursday and Friday Microchip Tech (MCHP) held firm. It even closed up on Friday.

This strong relative strength is a very bullish sign, and it occurred as MCHP has formed a very bullish daily flag pattern.

This flag pattern would be reason enough to consider MCHP as a buy above $99, so the strong performance last week makes it even more compelling.

In addition, the flag is a retracement to the 10-day moving average which is a good place to expect a strong stock to bottom in a pullback.

As a result, the trade setup is to enter over $99 with a stop under the low of the flag which is $95.

$97.50 has been a pivotal level since it started its correction, so $97 could also be used as a tighter stop.

Trade smart,

Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation