ARM's Impact on AI and the Technical Setup Business Outlook:
If you aren't familiar, ARM Holdings ( NASDAQ:ARM ) is not a chip manufacturer. They design processor architecture for the next generation of devices. This might sound like a marketing line, but it's literally their business. They specialize in energy-efficient chip design to enable increased processing capability, catering to a range of devices from servers to small gadgets like tablets and smartphones. Energy-efficient chips are essential for embedded AI processing requirements in smaller devices (about 45% of AMR's business).
As AI expands, a wave of device replacements is likely, and competition among device manufacturers should cause ARM's demand to grow exponentially. ARM designs the technology and licenses it to manufacturers, earning royalties on devices that use their architecture. This model allows ARM to scale efficiently without heavy manufacturing investments, ensuring a steady stream of revenue as their technology is adopted. They still collect royalties on products developed in the early 1990's!
Be on the lookout for ARM's next earnings report in August. They are estimated to report near the same time as AMD and SMCI. Price action between now and then will be sentiment-driven.
Technical Analysis
Here are a few charts to outline a possible continuation scenario.
From the main chart, look for a break above the Bollinger band as daily closes above or below are a strong sign of continuation. The KST indicator experienced a bullish crossover in early May, with the KST line closing above zero at the close of last week and the signal line likely to be above zero today. This indicates a sustained and favorable change in momentum. The Chaikin oscillator is overlayed with a Bollinger band. Although a more sustained positive move would be ideal, breaks above and below signal shift in the direction of the trend. Lastly, price has regained the 21-period volume weighted moving average.
ARM had a rapid and strong move after February earnings, leading to an extended 5th wave, followed by a deeper 3 wave correction that occurred near the expiration of their March 12 lockup period. It has quietly established momentum from the April low. The purple AVWAP from IPO was reclaimed in late April and then acted as support. The red from the high will likely be resistance in the first wave up. One blue AVWAP was added at the post IPO low and another at the top of wave 3 high. We'll see if these become areas of interest going forward. I drew a Fib time zone from wave 4 to wave 5, but I will likely redraw it as we build more history.
Taking a measured range from the start of this pattern and assuming that we see a test of the lower blue AVWAP would represent a 95% move.
Lastly, confluence zones with 2 Fib retraces. The first is drawn from the February high to the April low and the second from the momentum cross over in the composite index to the April low. The latter gives us a sense for nearer term targets as itis based on sentiment of market participants when we shifted to a secondary downtrend.
ARM/N trade ideas
ARM 1D MA50 rejection and buy for $160.00Arm Holdings (ARM) got rejected yesterday on the 1D MA50 (blue trend-line) after recovering it following a full month of trading below it. As the price got outside its long-term Buy Zone (green), this pull-back might be the last opportunity to buy the stock before Resistance 1 is tested. Our Target is marginally below it at $160.00.
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ARM Holdings Options Ahead of EarningsAnalyzing the options chain and the chart patterns of ARM Holdings prior to the earnings report this week,
I would consider purchasing the 85usd strike price Puts with
an expiration date of 2025-1-17,
for a premium of approximately $8.70.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
Arm is the bottom in?This is my first thesis based on TA. The trendline held support on daily and MACD is starting to curl to the upside. On the first earnings this stock has made quite the move to upside ranging from $75 to $164. I am targeting $117 as long as earnings are in favor. On the other hand, when the stock made 52 week high market has anticipated that the corporate will dump their shares after the expiry and it did not happened. Currently institution holder are holding more then 90% shares which giving me additional confirmation that they will most likely beat the earnings.
ARM about to pop one more time?ARM may be finishing up its 4th wave in an ABCDE correction.
Confirmation that the 5th wave has started would be received with a close of the candle above the descending trendline.
The 5th wave would potentially target the $200 level.
This idea will be invalidated should price break below $121.49.
ARM - Long SwingI'm betting on a swing long on ARM. I think the dip that happened on Tuesday may be the low that has kickstarted the next stage push for this stock, following the the enormous volume supported move that occurred after earnings in February.
1st Target : $145
2nd Target : $150+ breakout
Stop loss : I am personally keeping it tight at around $131, choosing to re-enter if it setups up again later.
HOW TO SET *** TRAILING *** STOP LOSSES ON TRADINGVIEWThis one is a bit of a hack but follows on from my video on how to set STOP LOSSES on TradingView for Connected Brokers.
To set a TRAILLING STOP LOSS you need to open your broker account, set the trade there and it will then be reflected on the TradingView interface.
Basically a set and forget type approach.
HOW TO SET TAKE PROFIT AND STOP LOSSES ON CONNECTED BROKERSOne of the best features of TradingView is all the connected brokers and how you can not only place, but also move any take profit and stop losses around on the screen to match what you are seeing on your various indicators or support levels.
Video also covers a way to gracefully exit out of a trade bit by bit if you are already up a long way and want to protect your profit by selling a little bit at a time instead of the whole lot if the price starts coming down.
It's very cool.
ARM - Momentum trade SMCI set some wild fire across all Semi-names. There will many sympathy plays across this sector this week, IMO.
I caught the ARM Short squeeze last week from 120 to 160. and I got few more commons when it dipped.
Below is the trade plan for commons, If you are trading options, have a tight stop loss.
Long between 137-145
Stop Loss - 130
Target #1 154
Target #2 172
Target #3 186, after a pullback.