Boston, MA 10/04/2013 (wallstreetpr) – Atmel Corporation (NASDAQ:ATML) (Closed: $7.33, Down: 1.36%) opened flat to positive on Thursday and after a failed attempt to remain in the positive territory, dived in the red to close near the previous day’s low. The price action created a candle looking like a bearish Hammer, with a long upper shadow implying selling pressure at the higher levels. The volume at 6 million was slightly higher against the average of 4.5 million.
A glance at the long term chart of the stock shows a rally to $30.69 in 2000 from its 1998 bottom of $1.50. In the aftermath of the IT bubble burst, this exception rise based on irrational exuberance, as famously coined by Schiller, was corrected in a more spectacular fashion as the stock retested the 1991 bottom of $0.58 by the end of 2002. But that low was not the bottom. The entire fall from the 2000 top took the form of a Double Corrective, a Zigzag and a Contracting Triangle connected by an X wave, which actually bottomed out at $2.50 in 2008. The next bull market could produce only a bear rally retracing exactly 50% of the entire fall from the 2000 top to the 2008 bottom.
The fall from the 2011 top of $16.80 is clearly subdivided into 5 legs. At the completion of 5 legs, it results in a retracement of the entire move and generally reach the swing high/low of the 4th wave. In this case, it gives us a target of $10.64 – $10.74.
On the other hand, the price is tracing a Contracting Triangle in the daily & weekly charts. A move above $7.91 or below $7.09 will produce a higher high or a higher low and hence will resolve this triangle. Then we can expect $5.80 or $9.20 depending on the direction of the breakout.