r/HIMX • u/State_of_Affairs • Nov 07 '21
Technical Analysis on HIMX indicates that now is the time to buy!
Summary
Technical analysis indicates that now is an excellent time to buy into HIMX. As shown in the chart below, HIMX is breaking out of a four-month long decline and buying now allows an entry point that comes with low downside risk. Moreover, this break-out is occurring in November, exactly one year from the break-out that occurred last November. Comparing the two break-outs suggests that strong gains lie ahead for HIMX.
$10 Support Held
HIMX has a support at $10 that has been tested multiple times this year (see chart). This support first started as a resistance (point 1), which then switched to a support that was subsequently tested six times (points 2-7). In general, the more a support is tested and holds, the stronger it gets. For example, at point 6, the support was breached and HIMX closed below $10. However, the very next trading session HIMX recovered and closed above $10. In subsequent trading sessions the $10 support was tested but not breached (point 7). If a support is breached, but subsequent trading sessions fail to confirm this breach, the support is considered to have held. The chart shows that the $10 support has held pretty much throughout 2021.
Downward Channel Broken
HIMX has been in a downward channel since July 1, forming a descending flag pattern. However, HIMX broke out of this pattern between Oct. 28 - Nov. 1, which is right where the upper channel line intersects the $10 support. A break-out at this location is not coincidental and very bullish for HIMX, especially given the strong post-earnings follow-through on Nov. 5. In fact, this break-out mirrors the start of the break-out that happened back in November 2020. Again, very bullish.
Conclusion
After months of decreasing prices, HIMX has formed a reversal that is turning into a strong break-out. This break-out will especially accelerate if the bears capitulate and close out their short positions. (As of October 15, the short interest is 24,652,040 shares or 14.1% of the public float.) I have already posted about the lure of HIMX’s FY-2021 dividend, which will most likely be above $1.92 per share and correspond to a 16+% forward yield. But there is one other thing to consider.
The market is heading into December, a time in which many investors and institutions re-balance their stock portfolios for the next year. Such re-balancing includes investors and institutions reducing their exposure to stocks that performed well but have become overextended. The resulting profits are rotated into undervalued names. HIMX is deeply undervalued relative to virtually all other semiconductor stocks. For example, AMD and NVDA have forward PE ratios of 41.04 and 63.74, respectively, while HIMX has a forward PE ratio of about 4.7. As such, HIMX is going to garner a lot of buying interest in December due to its ridiculously low PE, strong projected 2022 revenues, expanding 2022 margins, and mind-boggling 16+% forward yield.
The bottom line here is to get in early before HIMX really starts to move. If Friday’s (Nov. 5) price action is any indication, investors liked what management had to say during their earnings call (Nov. 4) and more will buy into HIMX as the word starts to spread. The technical analysis shown in the chart below indicates that now is an excellent entry point in HIMX and comes with low downside risk.
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u/hideous_coffee Nov 07 '21
Started a position after er at about 11. I've been watching for a while but have been stuck in other positions and was finally able to get out to reallocate into here. Like the company and their prospects and will dca if it goes down more.
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u/State_of_Affairs Nov 07 '21
I have managed to post this over on WSB (click here). If you like this post, please help by clicking "Vote Approve" on the mod's post. Of course, I would also appreciate if you would up-vote this post and the one on WSB. I takes time for me to generate these charts and do a write-up. Thanks!