ARM Holdings (ARM), the Cambridge based processor company, reported a 27% increase in sales for the third quarter of the year. Investors appear to be disappointed with the results, at 10:15 the stock was down 2.3%. The good news is that the revenues from licensing jumped more than 48% in the year. The bad news is that revenues missed analysts’ estimates. This miss is an opportunity to buy the stock.
There may more weakness to come in the next few days but if you are a short term investor there is upside potential with the stock expected to break into new all-time highs in the next few weeks. The company is one of the best technology companies in Europe, its chips power many smart phones and computers including the iPhone.
The stock has already made an all-time high in May this year eclipsing the previous high made in 2000 when the tech bubble burst. Technically there is good reason to believe that a new high is at hand. Based on Elliott wave analysis it would appear that the rally from the June low is an impulse wave in five waves [(i),(ii),(iii),(iv),(v)]. The subdivisions inside wave (iii) show another five-wave sequence [i,ii,iii,iv,v] an indication that the stock is moving up in an impulsive manner. Today’s sharp drop to 961p marks the end of wave (iv). The next move should be wave (v) up and the target is 1150p which is near the 61.8% of the distance from the bottom of wave (i) to the top of wave (iii), projected from the bottom of wave (iv).
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