On Monday, Microchip Technology (MCHP) received a positive adjustment to its Relative Strength (RS) Rating, increasing from 67 to 76. This rating from Investor’s Business Daily ranges from 1 to 99 and tracks market leadership based on a stock’s price performance over the past 52 weeks. Stocks with RS Ratings above 80 are often considered the best performers in the early stages of their moves, so it will be interesting to see if Microchip Technology can continue to exhibit strength and surpass that threshold.
Despite previously breaking out, Microchip Technology has since dropped below its entry point of 94.19 from a flat base. If a stock rises above a buy point and then falls back 7% below that price, it is considered a failed base. In such cases, it is advisable to wait for the stock to form a new pattern before considering buying again. It is also important to note that the most recent consolidation is a later-stage base, which carries more risk.
Microchip Technology reported negative growth in both sales and earnings last quarter, with its next quarterly numbers expected to be revealed around May 6. Within the Electronics-Semiconductor Manufacturing industry group, Microchip Technology holds the No. 5 rank, with Taiwan Semiconductor ADR (TSM) being the top-ranked stock in the group.
For those interested in investing in stocks in both bull and bear markets, understanding technical indicators like the Relative Strength Rating can provide valuable insights into a stock’s performance. Keeping track of a company’s financial health and industry ranking can help investors make informed decisions about their investments.
