Technology’s New Undisputed Leader:
We are going to focus a lot on the semiconductors in the first few paragraphs in this Technology Report, simply because it is well deserved. Below is the WEEKLY price chart of the SMH and notice it is now back near the highs made one year ago. Good things take time, in life and markets. This weeks break above a double bottom base also broke through a 3 week tight pattern as the prior 3 weeks all CLOSED very taut within just 53 pennies of each other. We know breaks from that type of action tend to be explosive and this week was no exception. The ETF put up huge gains last November of 7.5 and 6.4% the weeks ending 11/3 and 11/30 only to be followed quickly with sizable drawdowns. This one feels different. Of course only time and PRICE action will tell.
Chip Group Chipper:
The two heavyweights within the technology sector have been battling it out for supremacy. For a very long period of time software was undeniably the leader, but recent developments have put theory to the test. This week was a very interesting divergence as these two groups were about as bifurcated as could be. The SMH rose 5.8% this week, while the IGV was flat, and on this ratio chart below one could see the recent break above a downtrend, saw a quick bull trap only to surge again in April. On an individual stock basis chip play MCHP jumped 12%, while software ZS slumped by 11%.
We always capitalize the word CLOSING prices. As the saying goes amateurs open the market and pros close it. A good example would be the chart below of CTXS and how it appeared in our 4/1 Technology Report. This name was the recipient of a huge intraday move on 4/3, but notice it never traded below the 99 pivot, intraday or most importantly on a CLOSING basis. It did gain ground overall for the week, higher by just more than 1%, but CLOSED well into the lower half of the weekly range, and the tug of war at the very round par number continues. Nothing to do until a CLOSE below 99 occurs.