Cypress Semiconductor Corporation (NASDAQ:CY) hit a new 52-week high on the last trading session on Friday as the news of the company closing the merger with Spansion Inc. (NYSE:CODE) was taken very positively by the market. The volume at 14.5 million, against the average volume of 7 million only, marked the interest in the stock very clearly. At the high of $16.25, the stock also achieved a 100% return from the 2014 October swing low of $8.04, beating the broader market by a huge margin.
The merger between the companies mentioned above is expected to create an excellent synergy in the form of $135 million in the next 3 years. The plan of the company to lay off 1600 workers was conveyed by a memo by the Cypress Semiconductor Corporation (NASDAQ:CY) CEO T. J. Rodgers and the layoff may be split equally between the workforce of the two companies. This merged entity is expected to pay a quarterly dividend of $0.11 to the shareholders.
The daily charts show the strength of the stock with a remarkable increase in the volume in the last few months. In the short term, the technical state looks a bit overstretched but the kind of bull market the stock is in, it remains quite capable of cooling off the overbought state with a sideways phase of consolidation, or just a shallow correction at most.
In the medium term, any correction may find strong buyers around $13 and $11 at the lower levels. The marked increase in the volume goes very well with the long term picture, which shows the stock bouncing within the band of $5-$25 for the last two decades and strengthens the speculation that the current rally may find any long term top only near $24-25 and not before that. Investors may use all dips to invest in this stock.
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