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April 19, 2005
TXN Earnings & Chart
Texas Instruments (TXN) reported earnings Monday after the close and the stock advanced after the announcement. Earnings were up and revenues were flat. While an increase in earnings is certainly positive, I am always skeptical when top line (revenue) growth is sluggish or non-existent. You can only cut cost and improve efficiencies for so long. At some point, revenues need to grow for earnings to improve. The stock was up after hours because of the CEO’s upbeat statements: high inventories are coming to an end and the environment is improving.
But what about the chart? TXN still shows good relative strength in 2005. While the Nasdaq and S&P 500 moved to new 2005 lows last week, TXN held above its late January low. Notice that the stock formed an island reversal at the January low. TXN firmed after Friday’s gap and is slated for a gap up today (Tuesday). Should this gap hold, another island reversal would form and a move above 24.5 would break the trendline extending down from early March.
Posted by Arthur B. Hill at April 19, 2005 07:16 AM