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Support layers in place for semiconductor stock

ON Semiconductor Corp (NASDAQ:ON) has traded choppy on the charts, currently down 4.7% year-to-date. The stock could be bracing for a short-term bounce, however, as the ON has just returned to two trendlines with historically bullish implications. According to data from Schaeffer’s senior quantitative analyst, Rocky White, the stock is currently trading within one standard deviation of its 200- and 260-day moving averages.

The ON has returned to the 200-day trendline four times in the past three years, and was higher a month later 75% of the time, with an average gain of 1.8%. Its 260-day moving average saw five similar signals, after which the stock was higher 75% of the time with an average gain of 5.6% in one month.

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Further tailwinds could also come from an easing of pessimism in the options stands. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX), ON has a 10-day buy/sell volume ratio of 1.83, that exceeds 90% of the readings for the past year.

It’s also worth noting that short interest is 4.8% of the stock’s free float, leaving potential for short hedging. It would take nearly three days to redeem these bearish bets, at ON’s average trading pace.