3 Smaller, Large-Cap Chip Stocks Expected to Move Higher
In the investment world the definition of a large-cap stock is any company that has a market cap over $10 billion. That leaves a lot of room between $10 billion and the $1 trillion market cap we now have for a few stocks. Combing Tickeron’s list of A.I. Trend Predictions from January 14, I couldn’t help but notice three semiconductor companies with smaller, but still large-cap, stocks that received bullish signals with high probabilities of success.
All three stocks get a “strong buy” rating from Tickeron’s scorecard and the signals all had confidence levels of 88%-89%. The three companies are ON Semiconductor (ON), Qorvo (QRVO), and Teradyne (TER). All three have market caps below $25 billion and they score very well on the fundamental and technical screener.
All three stocks get one negative score on their fundamental analysis, but it’s a different indicator in each case. Teradyne gets four positive readings from the fundamentals, Qorvo gets three positives, and ON Semiconductor gets two positive readings. The only area where all three score really well is in the Profit vs. Risk ratings. Teradyne and Qorvo both get great marks in the Price Growth Ratings.
The companies do even better on the technical analysis screener. All three stocks get four bullish signals. Teradyne doesn’t get any bearish signals while Qorvo and ON Semiconductor each get one bearish signal.
One of the more interesting observations was that the four bullish signals were the same for all three stocks. The signals came from the Aroon Indicator, the MACD indicators, the Momentum indicators, and the Moving Average indicators. The bearish signals for Qorvo and ON Semiconductor were both from the Bollinger Bands.
All three of these stocks have rallied tremendously since their March lows. ON Semiconductor is up nearly 350%, Teradyne is up over 200%, and Qorvo is up over 150%. The rallies have put all three stocks in overbought territory based on their 10-week RSIs and their weekly stochastic indicators. But as the saying goes, “overbought can always become more overbought.”
Looking at the sentiment indicators for the three stocks, something else caught my attention. The short interest ratios for both ON Semiconductor and for Teradyne are extremely high. Teradyne’s is 7.41 and ON’s is 8.04. The average short interest ratio is around 3.0. What the high short interest ratios suggest is that there is considerable bearish sentiment building toward the stocks.
From a contrarian perspective, a high short interest ratio is a good sign because it means, if the stock continues to rally, the short sellers can add buying pressure if they have to cover.
The complete comparison of the three stocks from Tickeron appears below. It shows how the stocks compare to one another and how they stack up against other stocks.
SMH sees its Stochastic Oscillator ascends from oversold territory
On December 23, 2024, the Stochastic Oscillator for SMH moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 52 instances where the indicator left the oversold zone. In of the 52 cases the stock moved higher in the following days. This puts the odds of a move higher at over .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on December 23, 2024. You may want to consider a long position or call options on SMH as a result. In of 79 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for SMH just turned positive on December 23, 2024. Looking at past instances where SMH's MACD turned positive, the stock continued to rise in of 44 cases over the following month. The odds of a continued upward trend are .
SMH moved above its 50-day moving average on December 23, 2024 date and that indicates a change from a downward trend to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SMH advanced for three days, in of 333 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day moving average for SMH crossed bearishly below the 50-day moving average on November 22, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SMH declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
SMH broke above its upper Bollinger Band on December 04, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for SMH entered a downward trend on December 09, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
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