Taking the Broad View on Broadcom
As most of you know, for the last 6 months or so I have been getting more interested in the Semiconductor sector. I felt it was nearing a bottom and would see better days if the economy continued to improve. One of the names that has caught my eye recently is $BRCM. We all know they do a decent amount of business with $AAPL, but take a glance at their website and you will see they make the brains to a lot of stuff that runs in the background of our interconnected lives. So, the story is there even outside $AAPL; but stories don’t always get the attention they deserve. That is why we look at the chart and see does this one deserve our attention at the moment?
The daily chart caught my eye first as it has been wedging for a good while into a symmetrical triangle. One more important aspect to me was the last higher low didn’t get anywhere near the bottom rail. When that happens near the apex, often the next leg is the breakout and that looks to be what we are getting.
That pullback from the top rail also retraced about 50% and held (for the most part) the 40 on RSI to hold a bull range. With it back over 60 there isn’t a range question. The tweezer bottom didn’t hurt either. Looking at the weekly chart we can see the Triangle better formed here. Now, many might say it is in a downtrend, so the triangle is likely to break to the downside. This is often true, but when it doesn’t the move can be fast since it catches many off guard.
You can see here the weekly still has a bit to go before it moves into an RSI bull range, but it is heading for a challenge of 60 with CFG sporting a positive reversal. If we can get a little more follow through on the Triangle breakout it carries a measured move near 47 which matches the January 2011 highs. That seems like a ways from here and could take a bit to get there. If it does though, it is likely to pick up some momentum along the way, so let’s step back one more level. A look at the monthly chart show that after the 47 area, the only thing keeping us in the 12 year base is 50.
If it can clear 50, then there is a lot of room above. Maybe they early buyers will turn out right after all, just about 15 years too early. All time highs on this one are over 180, but clearing 50 is a big hurtle from here; so take it one step at a time and see if the current breakout holds. If it does, feel free to look a little longer if that fits your plan.
Good Luck, it is there for the making!
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