Cypress Semiconductor Corporation (CY) shares rose more than 10% during Wednesday's session amid reports that it is considering a sale after receiving takeover interest. Cypress Semiconductor is best known for designing and manufacturing flash memory chips and micro controllers that are used to power small electronic devices.
Bloomberg reported that Cypress is working with advisors to explore strategic operations, including a potential sale, after receiving takeover interest. The news outlet cited anonymous sources familiar with the matter that weren't authorized to speak because the matter isn't public. Bloomberg reiterated that no final decision has been made at this point.
Over the past several years, the semiconductor industry has undergone significant consolidation to combat rising costs and a slowing customer base. NVIDIA Corporation's (NVDA) deal to acquire Mellanox Technologies for about $7 billion in March and NXP Semiconductor NV's (NXPI) move to acquire Marvell Technology Group are just two of the latest examples of these trends.
From a technical standpoint, Cypress stock rebounded from lower trendline support levels to retest prior highs at around $17.59. The relative strength index (RSI) moved closer to overbought levels with a reading of 62.26, but the moving average convergence divergence (MACD) experienced a bullish crossover that could suggest a prolonged trend higher. These indicators suggest that the stock could have a bit more room to run before experiencing some consolidation.
Traders should watch for a breakout from prior highs at $17.59 toward trendline resistance at $18.78. If the stock moves lower, traders could see a move back toward trendline support levels at around $15.14. The move higher or lower will hinge on the company's decision to pursue takeover bids. In the meantime, price action is driven by little more than speculation.
The author holds no position in the stock(s) mentioned except through passively managed index funds.