Taiwan Semiconductor Manufacturing Company Ltd. (TSM)

TSM stock forecast: buy or sell

TSM stock outlook

  • After marking new highs yesterday, Taiwan Semiconductor Manufacturing closed today at $66.96 exploding a 2.9%
  • Taiwan Semiconductor Manufacturing is presenting its earnings report next Thursday
  • The price is currently over the upper Bollinger band, which is usually an indicator of a short-term correction
  • Taiwan Semiconductor Manufacturing Company Limited engages in manufacturing, selling, packaging, testing, and computer-aided design of integrated circuits and other semiconductor devices.
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Disclaimer:
The viewpoints contained in this article are personal and not recommendations for you to buy or sell shares. The author of this report does not have an understanding of the specific situations of the reader, his or her own finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Comments are provided for education motives only

TSM stock chart overview

Should I buy Taiwan Semiconductor Manufacturing stock?

Even if you are a experienced or a novel trader, best trading results come from using an investing strategy that never leaves to random or subjective opinions when is the best moment to buy or sell stocks. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is TSM stock a buy?

In the current situation of Taiwan Semiconductor Manufacturing there is not any eligible buy setup. This doesn't mean we expect a selloff for TSM in the next few days, or that it may not climb higher. Simply, it doesn't match our recommended trading systems

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Should I sell Taiwan Semiconductor Manufacturing stock?

Knowing when to sell a stock is even more difficult than knowing when to buy it. Trading strategies give us the ability us to avoid rash decisions based on our personal feelings or the noise that surrounds the market. We like very simple setups to guide us on when is the best time to sell our shares. Be aware that these setups are not intended for selling short TSM stock

As a golden rule, you should not keep an investment that produces higher than expected losses upon the buy. The moment to sell shares must always be determined by the stop-loss (automatic or manual)

Is it time to sell Taiwan Semiconductor Manufacturing stock?

Currently, Taiwan Semiconductor Manufacturing stock doesn't match any of our preferred sell setups, so if you own Taiwan Semiconductor Manufacturing stock and your operation is in profit probably is not time to sell now

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Analysts' recommendations to buy or sell Taiwan Semiconductor Manufacturing stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

We don't have any rating published in the previous 30 days for Taiwan Semiconductor Manufacturing

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Technical analysis

Since in mid-March, Taiwan Semiconductor Manufacturing has been printing an uptrend that so far marked a gorgeous 58%. The price shows higher peaks and higher troughs, and along the way gave some entry points for those who wanted to invest. Latest pullback was in mid-June, when price bounced at $54.12. On July 2, Taiwan Semiconductor Manufacturing broke out above its last top ($57.61) giving a good buy point that resulted in a 16.23% gain

TSM at Highs

Taiwan Semiconductor Manufacturing did it again, and marked new all-time highs (ATH) yesterday at $67.08. It's the third time in the last 10 sessions, marking an important rally

SMAs overview

A favorite tool of many trading systems are the moving averages, that easily show trend direction. A moving average is calculated as the simple mean of the previous N periods (usually sessions). Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days. Further about Moving Averages from sources like Wikipedia and Investopedia

Supports and resistances

Market investors use supports and resistances as a way to spot price points on a chart that tend to work as glass ceiling, preventing the price of a stock to move in certain direction. Supports are levels where the price tends to find support as it falls. This means that the price is more likely to "rebound" this level rather than break through it. Nevertheless, if the price breaks down the support, it will probably continue falling until approaching another support level. In contrast, resistances are where the price may find a curb as it rises. In the same manner, this means that the price is more likely to "bounce off" at this level, and if it finally breaks this level, the price will rise more easily until it finds the next resistance

Price is at all-time highs and there are not upper resistances.

The current supports are:

  • S1: $59.62 (-10.96% below)
  • S2: $58.75 (-12.26% below)
  • S3: $57.61 (-13.96% below)
  • Bollinger bands

    This is an indicator that was created in the 1980s by John Bollinger. It is composed of three bands that are plotted superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    When the price moves out of the band (above the upper line or below the lower line) it indicates that the stock is having a very strong momentum and therefore can correct the trend to the average. For this case, the price is above the upper band, meaning a short-term correction (at least) until it is below the band

    Relative strength index

    The relative strength index (RSI) is a technical indicator used in the analysis of stock markets. It is intended to chart the current and previous strength or weakness of a stock or market based on the closing prices of a recent trading period. Oscillator indicators, such as relative strength, are designed to indicate values in the range of 0-100. The relative strength indicator is one of the best known and most widely used indicators, and it was invented by J. Welles Wilder in 1978

    Relative Strength Indicator crossed over the overbought line today, marking a value of 77.56. Contrary to what many investors may think, the fact that the RSI value is above 70 does not imply a sell point, as stock price can rally during several weeks being above 70

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    Earnings and financials

    TSM posts quarterly financial report next Thursday. Wall Street analysts expect an EPS of $0.71, that is a 5.33% lower than Q1. Financial reporting day has a more than usual risk for traders as the data posted can gap up or down the shares price with lower liquidity and not respecting your buy/stop-loss orders. You can uncover more information about the earnings call and the earnings reports on the Investor Relations section of its website: http://www.tsmc.com.

    TSM hosted the quarterly investors event and posted the Q1 report in late April. TSM posted 1st-quarter earnings of $0.75 per share on sales of $10.4 billion. The Wall St estimate was $0.74 per share on revenue of $10.3 billion.

    Same quarter one year ago, reported EPS was $0.38, so recently posted EPS is a gain of 97.37%. Sales exploded a 45.98% on an annualized basis in the Q1, from $7.1B to $10.4B last quarter.

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