Stock Picks: SYF and SWKS

The S&P 500 (SPX) succumbed to selling pressure as it gapped down on March 19 and went as low as 2694.59 before bulls entered the buying picture to close the day at 2,712.92. It appears that the index is locked between 2,600 and 2,800. This consolidation is actually healthy for the market in the long run given its meteoric rise since December 2016.

While the market shifts into sideways consolidation, let’s look at names that are near firm support levels.

SYF – Synchrony Financial

Synchrony Financial is a consumer financial services company and the largest provider of private label credit card in the United States. Incorporated in 2003, they offer a variety of credit products to finance the purchases of goods and services together with partners in over 380,000 locations across the United States and Canada. Their sales platforms include Retail Card, Payment Solutions, and CareCredit offered through their subsidiary, Synchrony Bank.

SYF lost its bullish momentum in February 2017 when it generated a lower high of 37.75. It then broke support of 35 in March 2017, which prompted both traders and investors to dump their positions. By May 2017, the stock bottomed out at 26 support. Having lost over 25% of its value in just three months, SYF bounced and opened an opportunity for you to buy the early stages of a possible uptrend.

Technical analysis show that SYS has breached 35 resistance in November 2017, and this triggered a bullish reversal pattern. The stock went as high as 40.59 in January 2018 before succumbing to selling pressure. It retreated to 33.60 in February 2018, but then bulls stepped in to push the price above 35. This might indicate that bulls intend to create a higher low at 35.

The strategy is to buy as close to 35 as possible. If bulls preserve this level, the market would likely use it to move to our target of 44. The process may take three months.

Weekly SYF Chart

Monthly SYF Chart

As of this writing, the Synchrony Financial stock is trading at 35.26.

Summary of Strategy

Buy: As close to 35 as possible.

Target: 44

Stop: close below 33.50

SWKS – Skyworks Solutions Incorporated

Skyworks Solutions Incorporated is an S&P 500 and a Nasdaq 100 American company that designs, develops, manufactures, and markets semiconductor products for use in radio frequency and mobile communications systems. Incorporated in 2002, the company now has operational sales and service facilities throughout Asia, Europe and North America. Their product portfolio includes amplifiers, attenuators, demodulators, LED drivers, and power dividers/combiners, among others. In 2017, Skyworks Solutions, Inc. was listed among Fortune’s 100 Fastest Growing Companies and Forbes’ America’s Top 500 Companies.

SWKS launched its bull run in November 2014 when it took out resistance of 60. It created a series of higher highs and higher lows until it became toppish in June 2015 at 112.88. SWKS then generated a lower high of 106.74 in July 2015, which killed the stock’s bullish momentum and forced participants to dump their positions. The issue plunged until it bottomed out at 54.50 in February 2016. Bulls used this bottom to bring the stock back to life, and threaten to breach a major resistance level.

Technical analysis show that SWKS is about to finally take out resistance of 110, and trigger a large bullish reversal pattern. While the stock went as high as 115.98 on March 12, 2018, it retreated to as low as 107.50 on March 19 before bulls rushed in to push the price up to 109.33. The price action may indicate that a new higher lower was established. If that’s the case, it is only a matter of time before bulls conquer 110.

The strategy is buy when the stock goes above 110. If bulls claim this territory, they will use it to skyrocket to our target of 160. The process may take more than a year.

Daily SWKS Chart

Weekly SWKS Chart

As of this writing, the Skyworks Solutions Incorporated stock is trading at 109.33.

Summary of Strategy

Buy: Breakout at 110.

Target: 160

Stop: 105


Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.