Wolfspeed (WOLF) closed at 104.60 Thursday, below our recommended stop-loss level of 107. We recommend selling today.
WOLF opened higher yesterday as bulls looked to firm up a reversal off the recent lows hit mid-session Tuesday. The minute trading chart shows bears came in against some bullish buying in the session and found bulls lacked conviction. Trading action wasn’t completely bad, but the net effect is the bears won out. On the candlestick chart, this created a bearish outside day, with the high price and low price greater than the prior two days’ high/low. That suggests the recent move to the downside has momentum still.
There is more support for WOLF here – the 200-day moving average is around 100, and a price gap created in late October provides support until 96. The temptation is to give WOLF more leeway. However, with Greentech still testing support at the bottom of its seven-month trading range, if we find WOLF testing those levels of support it likely means Greentech (and tech more generally) has broken its own support and the risk to the downside is greater. The logic of cutting losses wins out in these conditions.
Please let me know if you have any questions or comments. You can reach me at brendan@cabot.net.