“Chip” on Its Shoulder:
The old dilemma of whether to buy a leader or a former general? An analogy I often like to paint is investors should supply their portfolio with “all-stars” rather than triple AAA players in pursuit of a World Series. Some names need to take a rest, or a prudent pause before they start a fledging uptrend. A former good-looking semi-play in ON and its WEEKLY chart below could be ready for the promotion to the big leagues. A couple of weeks ago produced its third consecutive positive earnings reaction up 11.5% on 7/29 and on the daily chart there are some green shoots with Thursday seeing a third break back above its 200-day SMA, since early July, and it is ignoring a prior bearish island reversal with the gap down on 8/2 (after the gap up on 7/26). You can almost feel the bear’s exhaustion of trying to push this name lower and are most likely looking elsewhere for shorting opportunities. Notice too on the ratio chart how it has been outperforming an already firming semiconductor group. Use a CLOSING stop below 72 if one takes the play.