Stock of the Day (2/17/21) – AMKR – Amkor Technology CRUSHES IT

amkor stock chart

Today we dive into AMKR stock. Amkor Technology is a provider of semiconductor packaging and performs test services. This means that they provide parts and testing for microchips that exist in technology like your computer or other electronic devices. The packaging specs can range from specific requirements like the size and thickness of the chips, to the electrical, mechanical, and thermal performance testing of the devices. Their website has an interesting and easy to understand package for their 2021 product line.

A special note for Amkor stock is that they have been constantly beating earnings estimates. In Q4 2020 they crushed expectations, posting a $0.52 earnings per share (EPS) vs. estimates of $0.37. Just check out the history of their past four quarters:

Chart Formation

The most successful stocks are usually the safest bet to purchase on technical analysis. Another stock in a similar cup and handle setup is it yesterday’s CAT. When a company like AMKR, who consistently is crushing earnings estimates, sets up a chart pattern like a cup and handle, saucer, or double bottom, you want to make sure you are ready to pounce.

Chances are you are like me and missed this opportunity with AMKR stock. Now you want to know, “is it too late to buy AMKR stock?”. As we take a look at the formation of the chart, we notice that if this stock was on our radar just 1 week before today, we would be swimming in a 30% gain right now. Let’s break down what happened to AMKR.

On January 20th 2021, AMKR stock hit a new high intraday at $19.05 before closing the end of day down in the red at $18.54. The high point marked a new all-time high for Amkor Technology. The stock continued downward for an additional 7 days before finding support at $15.51 on January 29th.

The support point on this day was significant as you can see it intersected with the thin blue line on the chart. This line is the 50 DMA or, 50 day moving average. Often times stocks will find support on moving average lines. I personally use the 50 DMA and 200 DMA lines as my analysis points in most cases.

After Amkor bounced off the 50 DMA, it began to climb back up in price until February 8, 2021 when the company announced their Q4 2020 earnings. Based on the strong outcome and crushing estimates, AMKR stock gained almost 8% share price in one day, on greater than 100% of the daily average volume to close at $19.24

The key buy point here would have been to buy on February 8th once the share price passed $19.15. Some investors wait until just before the market closes to enter a position. It would have also been appropriate to enter a position at end of the day at $19.24.

After entering at the buy point, the stock saw continued accumulation by institutional investors. This is assumed by observing the massive volumes that appeared on both February 11th and 12th. These days are what you look for as a technical momentum trader. Usually it would be good to take some profits on the way up around 15% or 20%, but everyone has their own approach and strategy.

Strengths

  • The support in the cup pattern was based on a bounce off of the 50 day moving average. This is considered a strong support line.
  • Increase in price from the bottom as well as the breakout occurred due to a favourable earnings call. Generally if earnings beats estimates and sentiment turns favourable for a company, this is a sign of strength.
  • The breakout on 2/8/2021 occurred with greater than 100% daily average volume. The best breakouts look for 50% or better volume, so this pattern checks this box.
  • AMKR stock has a history of beating earnings estimates and is currently now at a 80.24 score on the Relative Strength Index (RSI)

Weaknesses

  • The cup formation was over a relatively short time span, only spanning about 3 weeks. The best cup and handle patterns take at least 5-8 weeks to form.

Should I Buy AMKR?

Amkor Technology is currently a very hot stock, and a well performing company. The stock is already 30% past it’s buy point. It would not generally be the best time to enter a position, even though the stock may continue to rise. The best time to enter a new long position will be to monitor and look for patterns to form. Learn more about spotting chart patterns at our learning center.

As always, Stock Tavern is not suggesting you buy or sell this stock, and this analysis should not be taken as financial advice. Always do your research and make your own decisions, we all have different risk profiles and therefore no trade is right for everyone.

Disclosure: Stock Tavern has no current position in AMKR

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