Analog Devices is an American multinational that specializes in making signal processing semiconductor products. The areas of focus include data conversion, signal processing, and power management. Analog Devices is a market leader in data conversion with a staggering 48.5% global market share. The strength of Analog devices is its proprietary products as well as the high switching costs for clients. The growing digital economy around the world will boost the longer-term prospects for the company.
Lets see what the charts are telling us
The 20-year monthly chart of Analog devices shows the long uptrend that the stock is in. However, the year 2020 has seen a major correction. The stock fell about 25% from January to March of 2020 before bouncing back up 22% in April. During this 3-month fall, the price went below the bottom of the long term trend before rising back up.
Recently, the price crossed an important support level at $103, as shown by the dotted red line. The price now seems poised to test the next resistance level at $120 and then the top of the longer term trend, shown by the top yellow line, at $130. A long position can be initiated with a stop loss somewhere below $ 95, which is the bottom of the long term trend.
Positions taken at $105.92 with stop loss 25% below at $79. Short term investors put in a take profit order at $134 yielding a profit of 27%.