Markets were fell Friday to conclude with the leading Nasdaq falling disproportionately by .6%. That made it 3 straight losses for the benchmark with all 3 CLOSING at or in the lower half of the daily range. It fell .7% for the week and has been lower 6 of the last 9 and this weeks move was almost a bearish dark cloud cover candle following the previous weeks bullish engulfing candle. With that being said it still rests just 1.6% off all time highs and one gets the sense there is a real tug or war here between the bulls and bears. Is this stalling action in the Nasdaq just a resting period or is it part of a massive 15 year double top? On a YTD basis it is now higher by 7.3% compared to the S&P 500’s 2.1% yearly advance. The move came courtesy of the very sturdy semiconductor group, and when leading groups begin to falter one wants to pay close attention. The SMH slumped 3.1% for the week and fell beneath its 50 day SMA in heavy volume. This is a group where plenty of consolidation has been occurring with NXPI-FSL, AVGO-BRCM and INTC-ALTR combinations announced just this year to name a few. Peeking at individual names within the group it is obvious some distribution is going on. Laggard MU disintegrated more than 18% after an earnings miss Friday and is now nearly 50% off recent 52 week highs. Leaders in the group are also getting slapped around. Below is how we profiled QRVO in our Monday 5/18 Game Plan. It is quickly approaching the 78.07 double bottom with handle trigger originally taken that very session. But its hard to step into a name falling with that type of volume, especially after this weeks bearish engulfing candle which dropped almost 6% from all time highs. Proceed with caution.
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