What’s up?

Samsung said on Tuesday that its Q1 results will fall short of estimates as prices for memory chips and displays fell more than expected. The forecasts for Samsung’s financial results had already been bad as analysts expected a 12% decline in revenue.

Why is it important?

In general

Samsung is the world’s biggest chipmaker. Such a statement from the company emphasizes the faltering global economic growth and adds to the negative developments that have already taken place. For example, in January, Apple, which buys smartphone screens from Samsung, cut its revenue outlook for the first time in almost two decades. Samsung also experienced a decline in smartphone sales as consumers waited longer to upgrade their devices.

For investors

Samsung will release its pre-earnings statement on April 5. Despite the negative sentiment, more and more analysts believe that chip demand will soon start recovering. Both Samsung and its rival Micron expect this to happen in the second half of 2019 as chip inventories start declining. The stocks of chip companies rebounded last week. In addition, Korean firm said in January it was reducing spending this year to focus on the profitability of its memory operations. As a result, although the results of the past 3 months do have some significance, it seems that the market is looking forward and willing to have hope.

For traders

Notice that Samsung stock is close to the weekly resistance line in the 47,580 area. The price has been declining since November 2017. If it manages to overcome the resistance, the formation on the weekly chart may turn out to be a flag. Such move will open the way to 2017 highs in the 57,000 area in the long term. On the downside, support is at 44,500 and 43,000. The decline below the latter may trigger a bigger fall to the 200-week MA below 40,000.    

The weekly chart of Samsung Elec
Samsung Elect, weekly chart