St50 Technical Spotlight – Mentor Graphics and Taiwan Semiconductor

• Posted by BenCBanks
• on February 10th, 2013

Guest post by Ben C Banks (@BenCBanks)

Mentor Graphics Corporation ($MENT) has been a in a choppy channel for the past 29 years with a range from $33.63 all the way down to $3.34. Most of the time when channels break, a strong trend will develop. This is because of all the power or momentum that was building up while trading in the channel. Two recent examples of this are Walmart ($WMT) and Johnson & Johnson ($JNJ). Both of these stocks had long yearly channels that broke upward and then developed strong upward trends. Mentor Graphics is currently sitting at the weekly downtrend line with the moving averages curling upward providing clear support and the volume pattern is showing clear accumulation near these levels. Combine all these factors and you have a high probability of a breakout and a strong trend developing. The earnings will be reported on  2/26/13 so depending on your timeframe you may want to wait to avoid the unnecessary gamble of earnings or jump in and jump out before the earnings are released. Let’s look at the charts now. Please click to enlarge the images.

 

 

Taiwan Semiconductor Manufacturing Company ($TSM) has been in a solid uptrend for the past five months and continues to prove that it is one of the strongest stocks out there right now. After recently consolidating on the weekly time frame and letting the 8 EMA “catch up” Taiwan Semiconductor Manufacturing Company broke out again on the daily chart on Friday with strong volume after the moving averages were curling upward creating a tight, unextended scenario favorable for a breakout. One of the key things when picking stocks to trade is find where the next potential resistance is located. When you examine the chart for $TSM you quickly realize that the next major resistance level is close the $20 level and to view this resistance zone the monthly chart must be used. This is favorable as you do not want to see resistance close in either time or price. Let’s take a look at the charts now.  Please click to enlarge the images.

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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