Most traders and investors rightly will be focused on the fates of financials this week. With earnings reports from the Goldman Sachs (NYSE: GS) to US Bancorp (NYSE: USB) scheduled for Wednesday, additional volatility among the stocks of this sector should be expected (read previously, “Time to Fade the Financials?“).
At the same time, however, traders may also want to keep an eye on some of the technology companies that are also reporting earnings this week, including Taiwan Semiconductor (NYSE: TSM), F5 Networks (NASDAQ: FFIV) and Xilinx (NASDAQ: XLNX), all of which are scheduled to announce Wednesday.
Both TSM and XLNX are members of the semiconductor sector. And heading into trading on Wednesday, the semiconductor sector as a whole has a slight bias toward the oversold. This means that the sector is nearing levels where traders and investors have often found value and bid prices higher in the short-term. Looking specifically at Taiwan Semiconductor, the stock is down two days in a row after pulling back by 2% on Tuesday. And although only trading consistently in bull market territory since mid-December, shares of Taiwan Semiconductor were trading at their highest levels in months as recently as last week.
TSM has a neutral rating of 5 out of 10, and a short-term positive edge of more than half a percent. Additional weakness over the next few days would go a long way toward improving both the rating and the edges in TSM.
Xilinx, by comparison, finished higher by more than 1% on Tuesday and has more of a short-term bias toward the overbought. With a positive edge in the short-term of half a percent, Xilinx, like TSM, has a neutral, 5 out of 10 rating ahead of trading on Wednesday.
Down two in a row ahead of its scheduled earnings announcement on Wednesday, F5 Networks has slightly better ratings and comparable edges to both TSM and XLNX. FFIV has been trading consistently above its 200-day moving average since October and is just outside of technically oversold territory.
Traders and active investors looking for tech stocks with bigger edges may want to keep an eye on the pullback in another semiconductor stock: Marvell Technology Group (NASDAQ: MRVL). Shares of MRVL pulled back by more than 2% on Tuesday, closing lower for a fifth day in a row. Tuesday’s finish also marked the stock’s second consecutive close in oversold territory.
Once again turning away from semiconductors to other parts of tech, we can see that the three-day correction in Akamai Technologies Inc. (NASDAQ: AKAM) has that stock retreating toward levels where traders historically have been more likely to buy than sell in the short-term. The stock has a 7 out of 10 rating and a postive, short-term edge of more than half a percent.
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David Penn is Editor in Chief of TradingMarkets.com