Microchip Technology Renews Price Strength but Faces Consolidation Risk: Analyzing Its Relative Strength Rating
Microchip Technology (MCHP) received a positive adjustment to its Relative Strength (RS) Rating on Monday, increasing it from 67 to 76. This rating, from Investor’s Business Daily, ranges from 1 to 99 and tracks market leadership. It shows how a stock’s price performance over the past year compares to other stocks in the database. Historically, top-performing stocks typically have an RS Rating of above 80 in the early stages of their uptrends. It will be interesting to see if Microchip Technology can maintain its renewed price strength and exceed that threshold in the future.
While Microchip Technology recently broke out, it has since fallen back below its previous entry point from a flat base. If a stock rises above a buy point and then drops 7% or more below that level, it is considered a failed breakout. In such cases, it is recommended to wait for the stock to form a new base and breakout before considering an investment. It is important to note that the most recent consolidation is a later-stage base, which typically carries higher risk.
In its last quarter, Microchip Technology reported negative growth for both sales and earnings. The company is scheduled to release its next quarterly results around May 6th. Currently, Microchip Technology holds the No. 5 rank among its peers in the Electronics-Semiconductor Manufacturing industry group, with Taiwan Semiconductor ADR (TSM) ranked as the top stock in the group.
If you are looking for resources on chip stocks and semiconductor industry news, there are many options available. One valuable tool is Investors Business Daily’s Relative Strength Rating and Relative Strength Line which help investors assess momentum and potential of individual stocks
