Cree, Inc. (NASDAQ: CREE)

Cree, Inc. develops and manufactures lighting-class light emitting diode (LED) products, lighting products, and semiconductor products for power and radio-frequency (RF) applications. Its LED products include blue and green LED chips that are used in various applications, including video screens, gaming displays, function indicator lights, and automotive backlighting; LED components comprising lighting class packaged LED products for lighting applications, and surface mount and through-hole packaged LED products for video, signage, general illumination, transportation, gaming, and specialty lighting applications. The company also offers LED and traditional lighting systems for indoor and outdoor applications. Its power and radio frequency (RF) products include SiC-based power products comprising Schottky diodes, as well as SiC metal semiconductor field-effect transistors that are used in power factor correction circuits for power supplies in computer servers, solar inverters, and other applications; and RF devices, including a range of GaN high electron mobility transistors and monolithic microwave integrated circuits (MMICs) for military or commercial applications.

To review Cree’s stock, please take a look at the 1-year chart of CREE (Cree, Inc.) below with my added notations:

1-year chart of CREE (Cree, Inc.)

Notice the rising wedge I have outlined on the chart of CREE. A rising wedge price pattern is essentially a type of triangle formation in which the stock (CREE) has formed an up trending resistance line (red) and an up-trending support level (blue). These two trend lines converging on one another combine to form a rising wedge, which is a terminal pattern.

Confirmation of this pattern would occur if the stock broke the uptrending support. Any break out of the bottom of this wedge would also coincide with a break of the short-term support at $60.

The Tale of the Tape: CREE has created a rising wedge pattern, which should lead to a break lower. A short trade could be entered on a break out of the bottom of the wedge, which should be on a move below the $60 level. If a trader believes the stock has higher prices in it’s future, a long play could be made near $60 with a stop placed below that level.

Would you like assistance in making your TBS trades? If so, email me at Christian@yolopub.com and let’s talk about working together one on one!

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