MARKETS: Stocks pull back at resistance — YF Premium is bullish on Microchip (MCHP)

Yahoo Finance's Jared Blikre joins Myles Udland to break down the day's price action in stocks as well as a long in Microchip (MCHP), a Yahoo Finance Premium Investment Idea.

Video Transcript

MYLES UDLAND: All right, welcome back to "The Final Round" here on Yahoo Finance. Myles Udland with you in New York. Let's go over to Jared Blikre now for a closer look at this market that is in the red but continuing to kind of hang in there as we head towards the closing bell. Jared?

JARED BLIKRE: Yeah, lots of movement here. And we came into the day with all three of the major indices at important inflection points, the Dow climbing or right at its 200-day moving average, the S&P 500 at a key, its last Fibonacci retracement level, also price action resistance, and then the NASDAQ 100, not really our main index, but that's right at its-- at its record high, which it breached today, if ever so briefly.

And so we're seeing a little bit of a pullback here. It would be normal to see markets pause. And that's kind of what's happening.

So here's the intraday price action. And we can see we are up off the lows right now, 3,090 providing support. Just kind of looking at what's happened over the last five trading days, not really being able to fill this professional gap here. And that's just fine. That's kind of a bullish sign but probably-- probably will fill overnight. And then just looking at a year to date chart, we can see we're right at this inflection point right here. That's the resistance area.

So we'll have to see what happens going forward. Could pull back all the way to about 2,950. And that would be right around this breakout area right here. But I think that's as far down as we go.

Now I want to turn our attention to our Yahoo Finance Premium idea of the day. This is an investment idea by Argus Research. And they are reiterating their buy and raising their target in Microchip Technology to 125. So that would be somewhere, let's say, right up here. And some of the reasons they're giving, Microchip Technology rallied 12% in a buoyant market on June 3 after the company raised its fiscal quarter one '21 guidance. They appear to be one of the first companies to raise its guidance, even as a pandemic remains a global issue.

And finally, companies now seeing a better outlook are likely to be concentrated in areas related to the digital economy that directly benefit from the disruption unleashed by the pandemic. And again, that price target is 124. And if you're looking for a stop, you can have the 200-day and 20-day moving average protection at about 109. That would be right-- excuse me, 109 would be right in here. There we go. Back to you, Myles.