Skyworks Solutions, Inc. — A Future Buy?

03/25/15 04:18:09 PM

by Koos van der Merwe

Is Skyworks Solutions, Inc. a buy for growth at its present level?

Security: SWKS
Position: Hold

Finding a strong growth stock and holding onto it forever can be one of the best investments you can make. Identifying that stock though is not easy, especially when its price drops from a high of $80 to $2.78 after listing on the exchange. Researching the company and expecting an incredible recovery becomes a no-no, so what will trigger anyone's interest?

Skyworks Solutions is a company that has captured my attention because of its incredible growth in the share price since 2009. The company is a semiconductor company headquartered in Massachusetts. The company was founded in 2002. The company benefited from industry moves towards higher end mobile phones with multi-band communications.

Figure 1. Monthly Chart With Elliott Wave Count. The 2.618% Fibonacci extension of Wave I suggests that Wave 3 of Wave III could top out at $104.16.

Graphic provided by: AdvancedGET.

The monthly chart in Figure 1 shows how the share price dropped from a high of $78 in February 2000 to a low of $2.89 by 2002. Of course this was because of the technology bubble that burst in 2000. From July 2002 the share price moved sideways, trading in the $12.59 to $2.89 range, then from January 2009 the share price rose in an Elliott wave I to $37.48 by February 2011. Wave II bottomed in December 2011 at $13.96. From that level the share price has risen in a Wave 1 of Wave III, fallen in a Wave 2 of Wave III and has now risen in a Wave 3 of Wave III. The Fibonacci extension 2.618% of Wave I suggests that the Wave 3 of Wave III could top out at $104.16.

Figure 2. Weekly Chart With Elliott Wave Count And Fibonacci Extension. This chart suggests that Wave III could be complete with Wave 5 of Wave III testing the 2.618% Fibonacci Extension at $102.89.

Graphic provided by: AdvancedGET.

The chart in Figure 2 is a weekly chart suggesting that the Elliott wave count of Wave III could be complete with Wave 5 of Wave III testing the Fibonacci Extension of 2.618% at $102.89. The relative strength index (RSI) shown is at overbought levels, suggesting that a correction could be due. The dramatic rise of the share price, also suggests that the share is overbought, with a correction in Wave IV to the fourth Wave of lesser degree, suggesting a target somewhere between $44.22 and $59.55.

Figure 3. Daily Chart Suggesting A Future Top. A buy signal was given on October 21, 2014. The price since then has flirted with the lower band, but has not triggered a sell signal.

Graphic provided by: AdvancedGET.

The daily chart in Figure 3 shows a JM internal band and an Elliott wave count. The JM internal band is a 15-period simple moving average offset by 2% positive and 2% negative, A move with the close above the upper band suggests a buy signal, and a move with the close below the lower band a sell signal. A buy signal was given on October 21, 2014. The share price since then has flirted with the lower band, but has not triggered a sell signal.

The color of the candlesticks are decided by the XTL indicator. The Advanced GET XTL indicator uses a statistical evaluation of the market to tell the difference between random market swings (noise) and directed market swings (trends). A blue color suggests an uptrend; black is neutral and red a downtrend. The colour is currently blue. Finally, note the RSI is at oversold levels.

I would not be a buyer of SWKS at present levels. The stock is a fast growing one with plenty of opportunities on the horizon. I would prefer to wait for the Wave IV correction to occur before buying.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address:	3256 West 24th Ave
	Vancouver, BC
Phone # for sales:	6042634214
E-mail address:	petroosp@gmail.com

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Skyworks Solutions, Inc. — A Future Buy?

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