Cirrus Logic, Inc. (NASDAQ: CRUS)

Cirrus Logic, Inc., a fabless semiconductor company, develops signal processing integrated circuits (ICs) for audio and energy markets. The company’s audio products include amplifiers, codecs, converters, and audio DSPs for applications, such as smartphones, tablets, home theater equipment, automotive entertainment systems, and professional audio gear. It also provides controllers for LED lighting products, as well as high-precision analog and mixed-signal products for energy measurement and energy exploration applications. The company sells its products through direct sales force, external sales representatives, and distributors. Cirrus Logic, Inc. was founded in 1984 and is headquartered in Austin, Texas.

Before discussing potential trading opportunities, please take a look at the 1-year chart of CRUS (Cirrus Logic, Inc.) below with my added notations:

1-year chart of CRUS (Cirrus Logic, Inc.)

During the entire year CRUS has shown $25 to be a key level to the stock, specifically as support (green) since the end of April. CRUS has been steadily moving lower since September even though the overall market has been moving higher. Earlier this week the stock broke that $25 support, which shouldn’t be a surprise considering the recent trend lower.

The Tale of the Tape: CRUS has broken its support at $25 and the stock should be moving lower. A short position could be entered on any rallies back up near $25 with a stop placed above that level. A break back above $25 would negate the forecast for a move lower.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT