Layers of Support in Place for Semiconductor Stock

ON could soon stage a short-term bounce

Deputy Editor
Nov 7, 2022 at 3:12 PM
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ON Semiconductor Corp (NASDAQ:ON) has traded choppily on the charts, currently down 4.7% year-to-date. The stock could be preparing for a near-term bounce, however, as ON just pulled back to two trendlines with historically bullish implications. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the equity is currently within one standard deviation of both its 200- and 260-day moving averages.
 
ON pulled back to the 200-day trendline four times in the last three years, and was higher one month later 75% of the time, averaging a 1.8% gain. Its 260-day moving average has seen five similar signals, after which the stock was higher 75% of the time with an average 5.6% one-month gain.   

 

ON Nov7

More tailwinds could arise from an unwinding of pessimism in the options pits as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ON sports a 10-day put/call volume ratio of 1.83, which ranks higher than 90% of readings from the past year.

It's also worth noting that short interest represents 4.8% of the stock's available float, leaving some short covering potential. It would take nearly three days to buy back these bearish bets, at ON's average pace of trading. 
 

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