Texas Instruments Incorporated: New Highs for TXN Stock if it Does This

TXN StockTXN Stock: Eyeing an All-Time High

The first thing that drew my attention to Texas Instruments Incorporated (NASDAQ:TXN) stock was the company’s long-term price chart.

I look for certain qualities in a price chart in order to consider it a possible investment idea. I always begin my analysis looking at the long-term chart; this gives me the ability to discern the long-term trend. The pattern on the chart also helps distinguish which tickers are constructive from the ones that are not. A constructive chart is one that abides to technical signals and, most importantly, trend lines.

Once this criteria is met, I use shorter-term charts to instill strategies that require timeliness. Time frames can be narrowed down to hours and even minutes in order to pinpoint the best levels of execution. The use of multiple time frames helps affirm and reaffirm a trading bias. When all time frames line up with the same signal, my level of confidence increases.

The following chart illustrates the long-term trend in Texas Instruments stock.


Chart courtesy of StockCharts.com

The TXN stock chart above illustrates an uptrend that has been intact since shares bottomed in 2008, in the midst of the financial crisis. This trend is perfect and all tests of this line have proved to be an excellent opportunity to acquire shares as the trend toward higher prices continues. This trend represents the current bull market in Texas Instruments stock. As long as this line remains intact and TXN stock trades above it, my bias will remain bullish. A break of this trend would be reason enough to change my overall bias.

This chart is not the only reason why I am bullish on TXN stock. The following chart illustrates other bullish developments that reaffirm my current view.


Chart courtesy of StockCharts.com

In November 2015, Texas Instruments stock generated a golden cross. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). I use this signal to confirm that a bull market is on the horizon. I find it wise to always trade in the direction of this momentum indicator. When a golden cross executes, the only position I can warrant holding is a long position (or a neutral position).

In March, this same signal was almost averted as the moving averages began to converge. If the moving average lines cross, this would generate a death cross. This signal is the complete opposite of a golden cross and has bearish implications. The key takeaway is that when a signal is on the verge and doesn’t execute, it signals that the bulls are still in control, and it is not uncommon for the trend to accelerate after a signal is averted.

This averted signal in fact did accelerate the trend. The 50-day moving average became the dominant level of support as TXN stock trended higher. Anything greater than three to four days below this moving average would give me reason to believe that the current trend has fatigued, and a selloff may develop.

The following Texas Instruments chart illustrates a potential setup pattern.


Chart courtesy of StockCharts.com

Texas Instruments stock is currently sitting on its 50-day moving average and a short-term level of resistance has presented a setup pattern. If TXN stock can close above the level marked as resistance on the chart above, it would give me reason to believe that a new impulse wave is underway that could pave the way to test the all-time high set in January 2000, at $80.03.

The high of $80.03 is the last level of resistance that needs to be toppled before a new all-time high can be made. All-time highs are very bullish, but I do not expect this level to be broken on the first attempt. I would be quite content with just a test in this current run.

The Bottom Line on Texas Instruments Stock

TXN stock is a bullish masterpiece, and many signals have reaffirmed my bullish bias. I believe that Texas Instrument stock will be testing the all-time high set at the peak of the dotcom bubble. My bias on Texas Instruments stock will remain bullish for as long as the stock trades above the uptrend line that has defined this bull run.