Is There Any Hope For KLA-Tencor(KLAC)?

Posted by barkand on April 28, 2011 under Price trends, Support / Resistance | Be the First to Comment

KLA-Tencor hit a high of over $51 in early March. Since then, it has been in a clear downtrend, spending most of its time below the 20-day moving average. Notice also the weak volume during the attempted rally later in the month. The bulls were not enthusiastic about accumulating more shares. There was also the poor performance of the Relative Strengh Index at that time, maxing out at 55. Some would say it is a sign of a bear market when RSI can not climb above 60 during an uptrend.

So, is there any hope for KLAC?

Surprisingly, we think there could be. But not yet.  You can also see on the chart that KLAC met with some resistance at $40 in early December. Of course, by now that resistance point has turned into support. And later there was a gap from $40 to $41, which should also provide some support.  And finally, there is the “round number” effect which could provide still more support at $40.

We do expect KLAC to continue its current downtrend – it is currently bumping its head on both the trend line and 20-day moving average. But we can also see the possibility of money coming in to this one in the $40-$41 range.