u/jackandjillonthehill

This is an interesting chart to me.

I’ve posted the daily, weekly, and monthly, and all of them have some interesting patterns.

On the daily (pic 1), there is an interesting phenomenon - a gap in early May. On first glance, you might think this is a gap from an earnings announcement, however Q1 earnings was announced May 11, and the gap is between May 1 and May 7th.

In Japan, in early May, the Tokyo stock exchange closes down for “Golden week” - a week of holidays and vacation. So there is a gap in the price chart from May 1st to May 7th, with no price data, and the price gapped from 2550 to 3010, an 18% price gap, during that Golden week.

Then the earnings came out on May 11th, which were, honestly pretty lackluster, given all the excitement about chips. The stock retraced most of its move since the exchange reopened on May 7th, but did not go deep into the gap territory of 2550-3010, and certainly didn’t retrace at all into the pre Golden-week price range.

On the weekly chart (pic 2), the price has broken above the previous local high in 2021. It seems to have had a well behaved breakout on high volume, with a retracement on low volume to the breakout line.

Finally, on the monthly chart (pic 3), a bizarre pattern I haven’t really seen before. There is a beautiful symmetrical triangle that built up over the course of years from an upward trend line that starts in 2015 and a downward trend line that starts from the 2018 peak. There was a clear break down from this symmetrical triangle in 2024 after the Q2 2024 earnings result and the stock trended down for many years.

However that trend reversed and the stock bottomed on April 5th 2025, just a couple of days after “Liberation Day”, the day Trump’s massive tariffs were announced.

Then the stock recovered during 2025 and early 2026, and just prior to the early May golden week gap, it was retesting the down trend line (pic 4 is a closer view). After this gap, it has now broken above the downtrend line and the symmetrical triangle formation that was previously formed.

For context, Sumco is a supplier of Silicon wafers, which are used to make chips, like GPUs, CPUs, and DRAM, which are all in high demand now. It has about 20% global market share, with a relatively high share of 300 nm wafers, which are used for high performance chips. In combination with the other major Japanese supplier, Shin Etsu Handotai, they make up over 50% of global wafer supply. Sumco is a “pure play” on wafers, while Shin Etsu Handotai is a subsidiary lf Shin Etsu Chemical (40% of the company by revenue).

What is interesting to me is that part of the reason for the breakdown in 2024 was the rise of Chinese competition in wafer supply. The world was well supplied, and Sumco had been investing in capex for an AI driven cycle in DRAM, CPUs, and GPUs, but there was plenty of inventory out in the market, and the company suffered from overcapacity.

The largest Chinese competitor, in particular in 300 nm chips, is Eswin, with about a 40% market share of high end wafers within China, and about 10% on a global basis.

Look at the recent daily chart of Eswin (pic 5). Notice the big continuous move that occurred during the time period of that Golden week gap (May 1-8th). This also correlates with the moves in Micron and SK Hynix during the time period of that gap. This signals to me that the downstream environment has changed enough that competition is not as important a factor - both Sumco and the largest Chinese competitor are benefitting simultaneously.

All of this leads me to conclude that the old adage of “all gaps get filled” is unlikely to prove true in this case - this is a large gap in time in which many companies in the sector also moved up in price.

This means that a lot of algorithms and technical traders betting on a “gap fill trade” are unlikely to see their bets work out.

And it also signals to me that this is more likely to behave like a “runaway gap”, I.e. a gap that results in an extended move in the direction of the gap.

That would mean there is a valid stop at the pre gap price of 2550 yen (if slightly inconveniently wide at 14% below current price). A more aggressive stop might be the pre-gap high of 2800, and perhaps most aggressively, the post gap low at 2890.