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Specialized semiconductor firm Cree (CREE – 25-7/16) is poised for a rocky day today, as the shares are trading over 20 percent in the red in pre-open trading. Last night, the company said that while its third-quarter earnings (which should be released on or around April 11) will match target estimates of 18 cents per share, it will not fare as well the next reporting period. For the fourth quarter, the company sees its earnings-per-share falling up to 15 percent below third-quarter results. The troublesome combination of slowing markets and increasing competition were cited as the primary reasons behind this struggle.
Tuesday, the shares edged higher to close solidly above their 10-day moving average for the first time since February 1. This short-term trendline will undoubtedly be breached when the stock opens for trading today. From a longer-term perspective, CREE has traded below its 10-month and 20-month moving averages for the past five months. These long-term trendlines are presently on the verge of a bearish crossover.
On the options front, speculators are positioned fairly bullishly. Schaeffer's put/call open interest ratio (SOIR) for the stock stands at 0.33, which ranks in the lower one-fifth of all readings over the past 12 months.