Atheros: Wireless Technology Breaking Its Channel

Atheros (ATHR) is in a variety of wireless technologies.  The stock had been in a well-defined uptrend since the market low in March 2009.  The stock, in a very orderly fashion moved though the channel illustrated in the chart.  In this month's decline, ATHR broke-down out of the channel.  This could be a very bearish sign for the stock.  In fact, after slicing through the channel on the crazy Thursday, ATHR rallied back to the channel and failed.  However, all may not be lost for ATHR.  On the big down day on May 6th, ATHR fell to the 200 day moving average and bounced.  That point, coincidently represented a 38.2% retracement from the April 21st high.  This retracement level is important to those who follow Fibonacci levels.  Today ATHR traded again to the 200 day moving average and again it bounced.  So where does this leave us?  I'd say that ATHR needs to get back into the channel before it can be considered a buy.  The channel lies around $38.  The stock closed today (May 17) at $34.71.  Of course, if ATHR falls below its 200 day moving average, it could fall a long way, perhaps to the gap between $23 and $24.

The Case For Motorola

In this weeks's Barron's, there is an article that pulls together a positive investment thesis for Motorola. Yes, Motorola the once high flying cellphone and electronics firm that has seen its fortunes decline steadily and dramatically since it introduced the revolutionary Razor cell phone several years ago. With Motorola's stock price around $8.50, down from it's all-time high of $60 in the go-go late 90's, and up from it's 2009 decade-low of $3 now worth a look. The positive fundamental argument is based Motorola's long awaited entry into the smart phone market. It is releasing two smart phones both utilizing Google's Android operating system. The Cliq will be launched over the T-Mobile network and the Droid will be a Verizon network offering. Motorola, despite its recent market and product mis-steps still has excellent brand recognition and strong distribution. While the smart phone space is crowded with Apple and RIMM leading the pack, an entry from Motorola, could very will give MOT's stock price a lift. Now for the Technicals. What do the charts say?

I've pulled a monthly chart and it appears that there is a long-term trend-line that is a resistance line. The chart suggests that the stock is breaking above the resistance line. A small pennant formation has also been been broken on the upside. Further, the RSI's have moved above the "over-sold" level and the MACD has crossed its signal line to the upside. This all suggests that MOT is poised to continue its recent upward movement. If the break-out to the upside is for real, the first target level would be $12 which is where the 55 (in this case month) moving average line sits. The $12 price is also the 38% Fibonacci retracement level. If MOT can move beyond $12, I would look at the $15 area as the next target. This is the 50% Fib retracement level and is also where the 200-month moving average cuts across. If one enters the trade, I would suggest putting a stop-loss order in just below $7, the place where the 13-month moving average is.