Semiconductor stocks, Chip stocks, CPU stocks, Microchip stocks

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Now may be the right time to buy ON Semiconductor’s dip

With the Nasdaq fresh off a two-year low amid this week’s chip stock selloff, and the Biden administration’s move to limit semiconductor sales to China, it’s understandable why some investors may want to avoid this sector altogether right now. However, it is worth noting Arizona-based ON Semiconductor Corp (NASDAQ:ON) is now within striking distance of a long-term bullish trendline, which has historically bolstered the stock. Plus, now looks like the perfect time to nab the stock on the dip, with the shares last seen down 5.3% at $58.64 on the day, but still sporting a 35.4% year-over-year lead.

 

Digging deeper, ON Semiconductor stock pulled back to its 260-day moving average for the first time since mid-July. According to Schaeffer’s Senior Quantitative Analyst Rocky White’s last study, the security has seen four similar signals in the last three years, and was higher one month later 75% of the time, averaging an 5.6% gain. A move of similar magnitude would place ON just shy of the $62 level.

 

chartON 260 Day 2

A sentiment shift in the options pits could send ON Semiconductor stock even higher. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ON’s 50-day buy-to-open put/call ratio of 1.29 ranks in the 99th percentile of its annual range. This means options traders have rarely been more put-biased. Echoing this, the security’s Schaeffer’s put/call open interest ratio (SOIR) of 1.22 stands in the 88th percentile of readings from the past year.

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Image and article originally from www.schaeffersresearch.com. Read the original article here.

By admin