Skyworks Solutions Stock Has Explosive Upside Potential

SWKS Stock
Credit:iStock.com/scyther5

SWKS Stock: A Confirmed Close Above $110.00 Will Set the Wheels in Motion

I am focusing on Skyworks Solutions Inc (NASDAQ: SWKS) stock because I have reason to believe a very large move is on the horizon.

These beliefs are centered around the method of investment analysis I employ in order to generate a view on an investment. If you’re new to my work, let me explain. I use technical analysis in order to determine whether an investment is compelling or not. This method of analysis is based on the notion that price and volume indications can be used to project what the future may bring. I have spent nearly two decades devoting myself to this method of analysis for one simple reason: When it is applied correctly, the results are simply mind-boggling.

I am currently watching a particularity large technical price pattern that is in development on the SWKS stock chart. This technical price pattern has caught my attention because once it is completed, it carries significant price-moving implications.

This technical price pattern is highlighted on the following Skyworks Solutions stock chart.

Advertisement

Skyworks Solutions stock chart

Chart courtesy of StockCharts.com

This SWKS stock chart has been annotated in order to highlight the “cup and handle” price pattern that is currently in development.

This pattern is created as a result of a significant level of price resistance that acts to contain the stock price from advancing. The reactions that occurred off this level of price resistance created two troughs, where the first trough is much larger than the second. These troughs create a picture on the stock chart that resembles a tea cup, consisting of the infamous cup and handle.

Also Read:

Best Semiconductor Stocks List for 2017

Biotech Stocks: List of Top 10 Biotech Companies to Watch in 2017

The completion of this pattern will indicate that higher stock prices are on the horizon. In order to complete this pattern, SWKS stock needs to close above resistance, which currently sits at $110.00.

A completed cup and handle price pattern will suggest that higher stock prices are on the horizon, but that is not all this pattern is good for. This pattern can also be used to create a potential price objective. This price objective is created by taking the depth of the cup and extrapolating that value above the significant level of price resistance that defined this pattern. Applying this theorem to the Skyworks Solutions stock chart produces a price objective of $165.00, which is a considerable return once the pattern is confirmed complete.

These patterns do not always resolve themselves in a bullish manner—they can break down—but I have the inclination to believe that this pattern will resolve itself in a bullish manner because Skyworks stock is currently exhibiting bullish posturing.

The following stock chart illustrates the indication that implies that SWKS stock is currently bullish.

SWKS price chart

Chart courtesy of StockCharts.com

The focus of this chart is the 200-day moving average. This technical indicator is created by averaging the stock’s closing price over the last 200 days and plotting that value on the stock chart.

This indicator acts a dividing line that separates bullish investments from bearish ones. The distinction between these two polar opposites is easy to discern. When an investment is trading above the 200-day moving average, it is a bullish indication. When an investment is trading below the 200-day moving average, it is a bearish indication.

The stock chart illustrates that while this investment was trading above the 200-day moving average, the stock was staging an advance. While it was trading below the 200-day moving average, Skyworks Solutions stock refrained from doing so.

This is the same 200-day moving average that I highlighted when I first focused on Skyworks Solutions on August 21, 2016, in a publication titled “Skyworks Solutions Inc: SWKS Stock is Setting Up for a HUGE Rally.” In that publication, I highlighted the 200-day moving average as a bullish indication that this investment was finally able to move on to higher stock prices. When this publication was written, Skyworks Solutions stock was trading at $72.90. It currently stands at $101.39.

In the span of a little over a year, this investment has appreciated to the tune of 39.08%, and the pattern that is currently in development is suggesting that there is more to come.

Analyst Take: 

A technical price pattern has been in development on the Skyworks Solutions stock chart for a couple of years now. A confirmed close above resistance, which currently stands at $110.00, will complete this pattern, implying that much higher stock prices are on the horizon. As long as SWKS stock is trading above the 200-day moving average, I will have the inclination to believe that a bullish resolution to this pattern is on the horizon.