CRUS and SWKS recently pulled back to historically supportive trendlines
Tech stocks have dominated the news recently, with a handful of big-cap names reporting earnings. Most notably, Dow stock Apple Inc. (NASDAQ:AAPL) has pulled back from record-high territory, as traders panned the company's drop in
iPhone sales. However, there are two Apple suppliers that could be sending up "buy" signals right now, if history is any indicator:
Cirrus Logic, Inc. (NASDAQ:CRUS) and
Skyworks Solutions Inc (NASDAQ:SWKS).
Cirrus Logic Stock Circling Record Highs
CRUS stock recently came within one standard deviation of its 40-day moving average, after having traded above this trendline the majority of the time over the past two months -- a signal that's presented a buying opportunity in the past, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Specifically, the past 10 times this signal flashed for CRUS, the stock averaged a five-day gain of 3.67%, and was higher 60% of the time. Going out one month after a signal, CRUS was higher 80% of the time, with an average return of 5.47%.
Cirrus Logic, Inc. yesterday reported stronger-than-expected per-share
earnings and revenue for the fiscal fourth quarter, with the company's profit more than doubling year-over-year. However, CRUS stock followed AAPL into the red. From a longer-term perspective, the shares of CRUS have added 79.74% over the past year, touching a record high of $66.27 just last week. The stock was last seen trading at $64.75 -- roughly double its May 2016 lows.
Should CRUS resume its pattern of higher highs and lows, a short squeeze could add fuel to the fire. Short interest shot 21.7% higher during the past two reporting periods, and now represents 8.6% of Cirrus Logic's total available float, or about 5.5 million CRUS shares.
Skyworks Stock Tests Trendline, Round-Number Support
Skyworks Solutions is also fresh out of the earnings confessional, last week reporting solid quarterly results and earning a round of bullish
analyst notes. The stock touched an annual high of $105.34 on April 24, but has since pulled back to trade at $101.61. Further, SWKS also moved within striking distance of its 40-day moving average -- a trendline ascending into the round-number $100 vicinity -- which has been a bullish sign in the past. After the previous 11 signals, SWKS went on to average a one-week gain of 1.29%, ending higher 73% of the time, per data from White. One month after a signal, SWKS was up 60% of the time, with an average gain of 1.33%.
Now is a great time to buy Skyworks' short-term calls. In light of the post-earnings volatility crush, the stock's 30-day at-the-money implied volatility is at an annual low. Likewise, SWKS sports a Schaeffer's Volatility Index (SVI) of 23% -- higher than just 5% of all other readings from the past year, indicating attractively priced short-term options on SWKS.