We have been concerned about the weakness in the semiconductor group for a number of weeks after excellent outperformance for a very long period of time. What made us uneasy was some of the action in the leaders in the group. Their behavior tells a lot about the potential future direction of the group. Below we look at a couple of names that are best of breed in the group and how they were discussed in recent daily reports. They are wounded and today will be more so. Lets see how they respond today.
NXPI we looked at in our 6/29 Game Plan. The 102.50 trigger was never hit, but a stop below the important round par figure was. As of this writing premarket it is resting near its 200 day SMA. Pay close attention to how it acts there.
Stocks to be viewed as shorting opportunities are NXPI. NXPI hails from the semiconductor group which took a pounding Friday, and after a long perch at the top of sector rankings one gets the feel the overall strength is weakening. The Dutch play is up 32% YTD and 51% over last one year period, but just 4 sessions in the entire month of June. The stock fell 3.9% for the week and coupled with the bearish engulfing week ending 6/5 which fell 4.7% NXPI looks vulnerable. More concerning is that it lost its 50 day SMA and a 105.04 double bottom with handle breakout trigger taken out on 5/21. Short the name into strength near the 50 day at 102.50. Add to with a CLOSE below important par figure.