Semiconductor Stock Builds on Key Technical Support

Texas Instruments Inc (NASDAQ:TXN) was last seen up 3.5% at $294.04, extending a bounce off familiar support at the $280 level. The semiconductor name has traded choppily since its June 22 record high of $334.03, but sports a strong technical setup that could push it back toward that peak. Year to date, the equity has been outperforming with a 69.2% lead.

According to Schaeffer's Senior Quantitative Analyst Rocky White, TXN is trading within 0.75 times the 80-day moving average's 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above that trendline. This setup has appeared 16 times over the last decade, after which the stock was higher one month later 88% of the time, averaging a 6.4% gain.

While AI leaders have had a volatile month, TXN is more of an industrial and automotive semiconductor play. Of the 35 analysts in coverage, 18 carry a "hold" or worse rating, leaving plenty of room for upgrades. 

An unwinding of pessimism amongst options traders could also support a rebound. Though calls are winning out on an absolute basis, the stock's 50-day put/call volume ratio of 0.75 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 85% of readings from the past year, meaning puts are getting picked up at a faster-than-usual rate. 

When weighing in, options look like a good way to go. Texas Instruments' Schaeffer's Volatility Scorecard (SVS) sits at a lofty 99 out of 100, indicating the stock has exceeded options traders' volatility expectations over the past year.