Chartered Semiconductor Manufacturing (CHRT)

Company

"Chartered Semiconductor Manufacturing, one of the world’s top dedicated semiconductor foundries, offers leading-edge technologies down to 90 nanometer (nm), enabling today’s system-on-chip designs. The company further serves the needs of customers through its collaborative, joint development approach on a technology roadmap that extends to 45nm. Chartered’s strategy is based on open and comprehensive design enablement solutions, manufacturing enhancement methodologies, and a commitment to flexible sourcing. In Singapore, the company operates a 300mm fabrication facility and four 200mm facilities." (company website)

CHRT stock chart

Sell short

10-Jun-05. Chartered has been on a tear for the past month, shooting up from a low near $5.50 up to the current highs around $8, all without taking a pause (see sidebar). On Wednesday, CHRT jumped way up to open, but then fell. Thursday was a day of indecision with wide fluctuations but opening and closing at the same price (a long-legged Doji candle). Today it edged higher to open, but continued to fall. I bought in, betting that it will take a breather and retrace some of the past month's 45% gain.

  • Price momentum (PPO) — leveling off after strong increase
  • Trend (ADX) — still strong, but buying pressure (+DI) is starting to decline
  • Money flow (CMF) — neutral
  • Relative strength (RSI) — very strong, but pointed down
  • Stochastic RSI — overbought, hence likely to go down

At the end of the session, CHRT pulled up a bit to match Wednesday's close. Hmmmmm. That clouds the picture a little.

Buy to cover

loss Bottom line
-2%

16-Jun-05. After yesterday's deliberation day, CHRT gapped up to open today, and the open turned out to be the low of the day. When I saw that volume was starting to pick up and the price stubbornly stayed mostly above $8, I decided to cover for a small loss. The chart became considerably more positive this week: momentum (PPO), trend strength (ADX), and relative strength (RSI) all turned up, and buying pressure (+DI) and selling pressure (-DI) starting heading in scary directions when short.

I still think this was the right idea — look for a stock that took a huge leap up followed by a sizeable drop the same day. I just expected CHRT to take a deeper pull-back than it did. Perhaps the allure of the year-ago price level is too great.

CHRT stock chart
CHRT 1-year chart