Semiconductors Surging:

Comparison To Nasdaq:

The semiconductors have got their groove back. They were playing second fiddle to the software sector for months, but the semis are carrying the Nasdaq on its back. Perhaps they are giving software some time to rest before they reclaim the top leadership spot, but either way its a good sign for overall markets.

All Semiconductors Are Not Created Equal:

Below is a great illustration of the bifurcated nature that exists in all subsectors of market industries. It shows that trends are more likely to persist than reverse. Buy strength and sell weakness. Look at the disparity in these four “old tech” plays. XLNX and AMD are higher by 49 and 43% YTD respectively while MU and NVDA are up 31 and 33% in 2019.

Favorite Three Semiconductor Ideas:

KLAC:

“Old tech” semi play higher by 35% YTD and 7% over last one year period. Dividend yield of 2.5%.
FIVE consecutive positive earnings reactions up 4.9, 7.6, 10.5, 1.3 and .3% on 1/30, 10/30, 7/31, 4/27 and 1/26/18.
Higher 11 of last 13 weeks and just 3% off most recent all time highs recorded this week.
Enter on pullback into bull flag breakout at 118. Look for measured move to 132.

Ratio Chart Comparing Two Former Rivals:

These two prior generals in the space can no longer be spoken of in the same sentence. KLAC is just 3% off most recent ALL time highs, while AMAT trades lower by 35% off its own recent ascent. AMAT has very small dividend yield of .8% in contrast.

ADI:

Semiconductor leader higher by 25% YTD and 19% over last one year period. Dividend yield of 2%.
FOUR consecutive positive earnings reactions advancing 2.5, 4.1, 2.1 and 2.3% on 2/20, 11/20, 8/22 and 5/31/18.
Up 11 of last 13 weeks and once piercing resistance at round 100 number jumped a quick 10%.
Enter on pullback into break above WEEKLY cup base breakout trigger of 103.69 at 105.

MCHP:

Semiconductor play higher by 19% YTD and lower by 12% over last one year period. Dividend yield of 1.7%.
Down 18% from most recent 52 week highs and lower 4 of last 5 weeks, but most likely digesting 29% combined move during 6 week winning streak weeks ending between 1/11-2/15.
Back to back positive earnings of 7.3 and 5.9% on 2/6 and 11/8/18 inspire confidence.
Enter here after recent break above bullish ascending triangle, and successful gap fill from 2/5 session on 3/8.

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