• 3 days 3 Restaurant Stocks In Full Recovery Mode
  • 4 days Bitcoin Is Driven By Testosterone
  • 9 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 10 days How To Invest In The Cybersecurity Boom
  • 12 days Investors Are Patient With Unprofitable Giants
  • 14 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 16 days 5 Stocks To Keep A Close Eye On This Year
  • 17 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 18 days Central America Is Ready For The Bitcoin Hustle
  • 19 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 21 days Top Performing Stocks As Inflation Fears Grow
  • 22 days US Airline Stocks Take A Beating On New EU Restrictions
  • 23 days This IPO Could Open Sustainable Fashion Floodgates
  • 24 days Crypto Crime Nets Another $2B Fraudster
  • 25 days This Week’s Hottest Meme Stocks
  • 27 days Why World Markets Should Be Watching Germany Closely
  • 29 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 31 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 33 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 34 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Semi Bearish?

A technical look at Semi stocks and the Semiconductor index

I must be bearish the Semi Equipment sector because I am short both LRCX and AMAT; the former a successful NFTRH+ long position that hit target and found resistance as anticipated by this chart originally included with the update. I am not so worried about the gap because it changed the trend and gaps that alter the trend of a stock can take a long while to fill.

Applied Materials Weekly Chart

I went through all the reasons I am bearish the Semi Equipment sector in this post at NFTRH.com, so we don't need to cover that ground again. The Equipment sector is decelerating, period. But the Semis are more than the Equipment guys, they are the chip makers too, or even especially.

Today I celebrated New Years by trudging through all of my NFTRH chart lists and getting rid of obsolete or non-essential ones and cleaning up and categorizing the standards that I want to move forward with. This included tons of indicators and several different markets (for example, I have a list devoted entirely to currencies and ForEx now). Yay me!

In going through the big picture monthly chart list I was forced to review some Semi charts as well, and it took me down memory (no pun intended) lane. For instance, long before the current crop of chart-based Semiconductor bulls appeared, another NFTRH+ update used this chart to spotlight an attempt to break resistance. The target was loaded then, in June of 2014. I don't see much reason why the target may not be valid today (well, there is the declining volume post-2011).

Intel Monthly Chart

This is about the point where I usually insert the part of about a guru-free zone and my ample number of calls (or whatever you'd call them) that don't work out. The key there is risk management. I digress.

Intel is the daddy of chip makers. My favorite chip maker (fabless, mind you) has been Silicon Motion over the last few years. Here is the most recent + update on that one. I actually thought about buying it during last week's market fade (which included an excellent bull trap for the more naive Santa participants) but then I looked at the daily chart and stayed away. That's an unattractive short-term formation.

Silicon Motion Technology Daily Chart

Moving on, during the chart clean out today I also came upon the monthly SOX index, which includes both the big equipment guys like Applied Materials and Lam Research and the big chip guys like Intel. Here is what the situation looks like with a couple of views (click the charts to get a clear view).

When the Semiconductor index (SOX) did what Intel did and broke long-term resistance we targeted upside, the highest of which has not yet come about. We can pretty much call an upward retrace of 50% in the books as the pattern measured (+/-) to 780. The next measurement was from the bottom in 2008 to the breakout line, again (+/-). It, like Intel's 40 level, is still open.

SOX Monthly Chart

Here is another chart that used 1999 as an analog to what was going on back in 2013 into 2014. In 1999 the index crept up the top of the monthly Bollinger Band (20,2) in a precursor to a massive and manic blow off pretty much in line with other aspects of the tech sector. This was an early picture of what we were looking for as a clue to a stock market 'manic up' scenario. As you can see, this got temporarily neutralized in October 2014 and more convincingly neutralized last summer, and 'manic up' has (for this and other reasons) since been relegated to the back of the bus while the bear case drives.

SOX Monthly Chart 2

But SOX did do a classic test of support at 560. That was a good thing for the recent bounce (post September stock market bull suck-in/sentiment reset rally) prospects but it also formed a neckline. For all we know, the chip sector could take a good drop, find support again and one day proceed on to the best target. But if it happens, that is going to be one hairy test because people will start seeing the H&S and its neckline.

The previous post was mostly about the sector's fundamentals. This one is entirely about its technicals. Fundamentally, I am bearish the Equipment makers and neutral (at best) the chip makers. Technically, I am neutral the sector.

Funny, the kinds of posts that spring up after wading through a million charts.

Happy New Year.

 


Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates and NFTRH+ chart and trade ideas, or the Free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Oh, and follow @BiiwiiNFTRH.

 

Back to homepage

Leave a comment

Leave a comment