Sunday, January 29, 2012

Atmel Corporation! Help me!

I have recently received an email from an investor and also a frequent visitor to my humble blog. His name is Danny, he has invested in Atmel and is currently down by $2000. That is a lot of money to my and worth about few good Invicta' Watches at Amazon.

Anyway, as an author and founder of my humble blog, The Market Oracle, my aim is to help as many people as I can with my knowledge, skill and experience that I have gained after more than 13 years trading in the market.

His question is should he hold this stock through 2012. First of all, I did not know what is his entry price, but I figure it out, it should be at $11.20 level based on the current price of around $9.6 (based on 15% loses), for him to lost around $2,000.

Well, I promise you Danny, I will try my very best to honestly tell you what you should do now. As usual, I will first analyze the Long Term Chart follow by the Short Term Chart. I will then look at the fundamental side by analyzing the quarterly earning growth.

 Email from Danny

Based on the long term chart above, the strong support for Atmel is at the $8. The 1st resistance for Atmel is at the $12 level. Looking at the chart above, I believe that Atmel have a chance to test the first resistance at $12 based on the current market situation. The current US market is growing stronger day by day. Even though there are many negative news coming from Europe and also China, however, it does not stop DJIA from rallying day after day. I believe that the overall market is still strong and have lots of room to grow further.

Based on the short term chart, currently Atmel is in an upward trend. I believe this upwad trend will last a little longer as most of the upward move did pause for a slight consolidation. If Atmel is moving up fast and strong without consolidation in between, then I am dead worried, cause I believe the faster this stock go up, the faster it will come down as well. If I am correct, I believe that next week, Atmel will head to the $11 at least. The current 2 important technical indicators, the MACD and Stochastic, even though do shown a little negative signal, I believe that it is not a crucial issue here, because the negative indicators are merely pointing towards a short term consolidation move for Atmel.

Based on the quarterly earning for Atmel, Atmel is showing stable growth ahead. As long as it didnt show losses, it should be a safe haven stock to invest in. Even though the future forecase quarterly earning for Atmel is flat, but I believe that the super touch screen technology that Atmel supplies to many smart phone and tablet company is right on track for the future growth and potential of the company.

I believe that if the US market continues its upward move, I believe that many stocks will continue to surge further which includes Atmel. There a lot's of money which have yet to enter the market will do so in the coming month and bring the whole market to the pre crisis level.

Therefore,  my advise is to hold and Atmel and continue to ride this stock to the $16 level based on your entry price at around $11.20 for a 40% gained. It is definetely not a good time to surrender and sell this stock for a loss of $2,000. Continue to ride this stock and play based on range trading of between $8 and $12.

Good luck and god bless.

Disclosure: - I currently do not hold any stock in Atmel but may initiate an entry position if the Atmel did not perform as I have analyzed and if Atmel move to the important support of $8.00. If Atmel move downward and hit $8.00, it is definetely a big buy for me.

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