Monday, May 17, 2010

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.