EarningsBeats.com Digest for August 13, 2021
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When Price Diverges From the AD Line
We always like to see price rising, but there are times when price doesn't tell us the whole story about a stock. Take, for instance, Cirrus Logic, Inc. (CRUS). CRUS was flying as we opened 2021. It literally gained 25% in the first 3 weeks of the year. Since then, however, CRUS has struggled, falling from a high of 103 in
mid-January to a low in late-April near 71. Over the past several months, we've seen the stock trade mostly sideways. That part of the story is neutral at best. But we should at least consider the fact that the AD line set a fresh 52-week high as we ended July:
I don't think it would be prudent to completely ignore the fact that CRUS has been an awful relative performer vs. its semiconductor peers ($DJUSSC). But it's also extremely unusual to see a stock move sideways for the past 5 months, while its AD line absolutely SOARS to a 52-week high. I don't have a position in CRUS, but if I did, I'd keep a close eye on the 77.50 level. CRUS hasn't closed beneath that price level since the first week of
June. If it did, I'd grow much more cautious near-term. Meanwhile, a break back above the declining 20-day EMA could provide a big boost to the technical outlook.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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