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TSMC shares are bearish in a key zone after record gains. Has the stock bottomed out?

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Taiwan Semiconductor Manufacturing (TAI:2330) has weathered the tough year of 2022. At the current price of $98.36, the stock is trading at a significant discount from the high of $145 reached on January 13, 2022.

A general drop in tech stocks and Covid-19 lockdowns in China have curbed consumer demand and hit supply chains. Consequently, TSMC’s decline has been due to market dynamics rather than company fundamentals.

On a company level, TSMC sees strong chip demand ahead. It projects revenue of between $17.6 billion and $18.2 billion in the second quarter of 2022. This is higher than the record revenue of $17.05 billion in the first quarter of 2022.

However, despite the boosted sales projections, TSM closed down 3.09% on April 14 in New York, the earnings date. The drop showed that investors had already priced the stock into a record quarter. However, expectations of weakening global sentiment prompted caution among investors.

TSMC Shares Fail To Get Excited Despite Solid Earnings

Technically, TSM trades on TSM closed down 3.09% after reporting record revenue in the first quarter of 2022. A support zone around $98. The stock is increasingly bearish and could find the bottom of support at $96. We cannot rule out a further drop as an RSI reading of $38 shows that stocks have yet to reach oversold levels. With no immediate or short-term catalyst for stock appreciation, other than an earnings result, it could take longer for TSM to rise.

concluding thoughts

Strong chip demand and solid earnings make TSM a good stock. However, investors may have to wait to pick a lower bottom as stocks remain bearish on weak global sentiment. The stock could find support at $96 or slide lower.

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