Semiconductor concern Microchip Technology Inc. (NASDAQ:MCHP) could be on the cusp of more upside in April, if history is any indicator. Over the past 21 years, the month of April has fared well for the stock, which has averaged a return of 7.3% -- among the best of the S&P 500 Index (SPX) components. Furthermore, the shares have ended the month in positive territory 81% of the time, according to data from Schaeffer's Quantitative Analyst Chris Prybal.
More recently, the stock has advanced 5.3% so far in 2014, and notched a record high of $48.47 last Friday, March 21. Ushering the equity into the black have been its ascending 30-day and 60-day moving averages, which have provided support on pullbacks since MCHP's bull gap in mid-November. In fact, the security recently backpedaled to test the former of these trendlines, suggesting now could be an opportune time to jump in on the longer-term uptrend.
However, MCHP's quest for all-time highs has gone largely unnoticed on the Street. Just six analysts follow the stock, and half of them maintain tepid "hold" opinions. Plus, the consensus 12-month price target of $49.23 represents a slim premium to the stock's current perch at $47.02. Should the shares extend their upward momentum, bullish initiations, upgrades, or a round of price-target hikes could translate into contrarian wind in MCHP's sails.
Meanwhile, short interest accounts for 12.7% of the stock's total available float, or about 24.5 million MCHP shares. Even more telling, perhaps, it would take nearly three weeks to repurchase all of these pessimistic positions, at the equity's average pace of trading. As the shares keep barreling higher, a short-squeeze situation could add fuel to the stock's technical fire.
In the same skeptical vein, options players have been picking up MCHP puts at a faster-than-usual clip, relative to calls. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.90 stands higher than 77% of all comparable readings from the past year, pointing to a healthier-than-usual appetite for long puts over calls during the past two weeks.
Echoing that, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.82 ranks in the 69th percentile of its annual range, suggesting short-term speculators are more put-heavy than usual right now. An unwinding of these bearish bets could propel MCHP higher.
Speculators interested in wagering on higher highs for Microchip Technology Inc. (NASDAQ:MCHP) might consider buying the in-the-money July 42 call, which was last asked at $5.80.
The Case for Big Moves in IWM and QQQ
Featured Partners: AOL DailyFinance
© 2015 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: firstname.lastname@example.org
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.