Cypress Semiconductor Stock is Setting up for Higher Prices

Cypress stock
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CY Stock on the Verge of a Price Advance

I really like Cypress Semiconductor Corporation (NASDAQ:CY) stock for a number of reasons. The company operates in the semiconductor sector, which has been on a tear over the past couple of years. There’s little to suggest that this outstanding level of performance is going to end anytime soon.

My beliefs are centered around the CY stock chart, which is suggesting that Cypress Semiconductor stock is on the verge of commencing another price advance.

This bullish view on CY stock was generated by analyzing the company’s stock chart. This method of investment analysis is known as technical analysis, and it is the method I employ in order to discern whether an investment is set to appreciate or depreciate.

In early 2016, Cypress Semiconductor stock began to stage an advance, and the indications that support this advance continue to suggest that higher stock prices are in the cards.

The following Cypress Semiconductor stock chart illustrates the orderly bullish trend that began in February 2016.

Cypress Semiconductor stock chart

Charts courtesy of StockCharts.com

The bullish trend that began in February 2016 contains the quintessential characteristic that defines all bullish trends, which is a series of higher highs and higher lows. This price action creates the stereotypical staircase pattern that moves the stock price from the lower left to the upper right of the chart.

This bullish trend is captured using a simple trend line that is highlighted as an “uptrend” line on the stock chart. This uptrend line is created by connecting a series of significant lows that have occurred over this time frame.

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Using this uptrend line as a tool is actually quite simple, because it acts as a dividing line between a bullish investment and a potentially bearish one. As long as CY stock is trading above this uptrend line, I can only assume that the bullish trend that began in February 2016 is intact and that, therefore, higher stock prices can be expected to follow.

Breaking below this uptrend line would suggest that the bullish trend has met its demise and that lower stock prices are likely to follow.

In May 2016, a golden cross was generated. A golden cross is a bullish indication which serves to suggest that a bull market is in development. This signal is created when the faster 50-day moving average, highlighted in blue on the chart, crosses above the slower 200-day moving average, highlighted in red.

Ever since this signal was generated, the moving averages that generated it have remained in bullish alignment, reinforcing the bullish implications suggested by the uptrend line.

The following Cypress Semiconductor stock chart illustrates indications which are suggesting that another price advance is on the verge of commencing.

cy price chart

Charts courtesy of StockCharts.com

This CY stock chart has been highlighted in order to illustrate the constructive price action that has supported the bullish advance that began in February 2016.

Constructive price action consists of an alternating two-wave structure that allows a trend to remain orderly and sustainable.

The first wave of this two-wave structure is an impulse wave, which is highlighted in green on the above stock chart. An impulse wave defines the stage in a bullish trend when the stock price stages a swift and linear advance. This move is impulsive, so that’s why this wave is called an impulse wave. Impulse waves will stage an advance until certain metrics suggest that the investment has reached an overbought condition.

The second wave of this two-wave structure is a consolidation wave, which is highlighted in purple on the above stock chart. A consolidation wave defines the stage in a bullish trend when the previous gains are digested in order to alleviate the overbought condition that was created during the impulse wave that preceded it. This wave is characterized by its lack of price advancement, while it creates the necessary conditions for a new impulse wave to develop.

The indicator in the lower panel of the above chart, labeled “MACD,” which stands for moving average convergence/divergence, has been instrumental in suggesting which wave is in development. MACD is a trend-following momentum indicator that uses the crossing of a signal-line in order to distinguish between bullish and bearish momentum.

A bullish MACD cross suggests that the bulls have gained the upper hand, and that, therefore, the trend is geared toward higher prices. A bearish cross suggests the complete opposite.

Bullish momentum is required in order to stage an advance. Since this bullish trend began, two preceding bullish MACD crosses correctly suggested that an impulse wave was set to develop. Higher prices quickly followed.

The MACD indicator is currently converging, and a bullish cross is only moments away from being generated. This indication would suggest that the consolidation wave that is currently in development is finally complete, and that a new impulse wave is set to follow. These implications are supportive of the idea of higher Cypress Semiconductor stock prices.

Bottom Line on Cypress Semiconductor Corporation

I currently hold a bullish view on Cypress Semiconductor stock because the company’s stock chart supports this view. This bullish view is reinforced by indications that are on the verge of being generated on the stock chart, which would suggest that CY stock is set for another advance.

As a result, I will continue to hold a bullish view on this investment until there are indications on the company’s stock chart that suggest another view.