Cypress Semiconductor Corporation (NASDAQ:CY) – 40% more upside can’t be ruled out

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.

What does the Relative Strength Indicator (RSI) say about future trends with CY?

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.

About the Author

Barry is a senior journalist at Us Markets Daily. He reports, shoots and edits many of his own stories by himself.

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