Taiwan Semiconductor Manufacturing Co., Ltd.TSM), the world’s leading semiconductor chip maker is the focus of many investors these days for a number of reasons.
The company will report earnings this week, so let’s take a look at the charts.
In TSM’s daily bar chart, below, we can see that the stock has taken a massive cut over the past nine months. The July low did not hold for long and prices remained lower. TSM trades below the falling 50-day moving average and below the falling 200-day line.
The On-Balance-Volume (OBV) line that has been weak since February tells us that TSM sellers are more active than buyers. The Moving Average Convergence Divergence (MACD) Oscillator (MACD) is falling.
In TSM’s weekly Japanese candlestick chart, below, we see a picture where the stock could fall further. The price is falling sharply and trading below the negatively sloping 40-week moving average. No bottom reversal and no lower shadow tells me that traders are not interested in buying at current levels.
The weekly OBV line is still falling in the long term. The MACD indicator is falling.
In this TSM daily Point and Figure chart, below, we can see that the stock has hit and surpassed its downside price target in the $72 region.
In this weekly TSM Point and Figure chart, below, we can see a price target in the $45 area.
Summary strategy: In the latter stages of a bear market, shorts will make buyers nervous and bystanders nervous – the result could be a short-term rally. TSM could experience one of these rallies at any time but the main trend is still down. Avoid the long side of TSM until a bottom is formed.
Receive email notifications every time I write an article about Real Money. Click “+ Follow” next to my take to this post.
