Tech trio showing positive signs

From a technician's standpoint, these 3 semiconductor stocks are setting up for bullish trades.

By TheStockAdvisors May 9, 2013 10:24AM

Circuit Board © Datacraft Co Ltd imagenavi Getty ImagesBy Peter Bryans, Schaeffer's Investment Research


As traders, we are always looking at particular sectors and industries within the market for pockets of strength.


Here, we look at three names in the strong semiconductor area: Cree (CREE), Applied Material (AMAT) and Lam Research (LRCX).


Cree has been on a tear lately. The company reported earnings earlier in April, and has made a nice run since. It broke away after its fourth quarter earnings announcement in January of this year, and hasn't looked back.


Along with many other semiconductor names, the stock has really broken out, and boasts a year-to-date gain of nearly 60%. There has been a pickup in volume which is a bullish sign.


Applied Material has also posted a solid year-to-date return -- above 27% so far. After breaking out of its channel that it formed in February to late April, AMAT has made a sharp, impressive move higher.


I think that if the stock makes a pullback here, and even consolidates higher, then it could present a good trade.


Be aware that AMAT has earnings scheduled after the market closes on Wednesday, May 15. Keeping an eye on this name before and after earnings could give you a good "feel" for the stock and its reactions to different days in the market.


As long as semiconductors stay strong, AMAT is certainly a good candidate for a long position going forward.


Lam Research is probably my favorite setup. The stock has been climbing higher in 2013, after some sideways action that started in February.


The recent gap higher on the chart was from a positive earnings reaction on April 25. Since this time, LRCX has moved sideways, and is somewhat "digesting" these big gains. Currently, it is forming what is known as a "bull flag."


Also, note the big pickup in volume recently. Again, this is another bullish sign. Watching this one for a continuation move higher presents a good risk/reward setup.


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