CREE Daily (Nasdaq) Cree TradeStation

The big ramp today extends a rally that began a month ago just above the $26.00 area. Cree was in the process of working off a near-record volume 10% ramp after the company raised its fourth-quarter financial targets. The stock could not build on the May 27 move and, within a few days, began a deep pullback that retraced all of the one-day gains. The slide ended on July 13 as volume continued to contract. With the big gains today Cree is now up 25% in four weeks.

The current run has left behind significant underlying support. A light-volume pullback to the $32.00 area would be a buying opportunity. On the upside, I expect the stock to run into some resistance at $35.00. This is an area of multiyear highs going back to the first quarter of 2006 and including the third quarter of 2007 as well as last year's first quarter. Once convincingly through this area, Cree will have left behind a very solid long-term base.

At the time of publication, Morrow had no positions in the stocks mentioned.

Know what you own: Other semiconductor equipment and materials stocks include Applied Materials (AMAT - commentary - Trade Now), KLA-Tencor (KLAC - commentary - Trade Now), Advantest (ATE - commentary - Trade Now), Lam Research (LRCX - commentary - Trade Now), Advanced Semiconductor Engineering (ASX - commentary - Trade Now) and Varian Semiconductor Equipment (VSEA - commentary - Trade Now).