Semi Swoon:

  • Semiconductors are in nearly everything we use these days. Therefore they are often a genuine gauge of how well the technology group is doing. Rallies absent of them are thought of as illegitimate. Much discussion was made of the powerful 40% move off the late December lows. They have since given back half of that gain in rapid fashion, and this week completed a 4 week losing streak (just its second such streak since spring of 2016), with the last 3 CLOSING right at lows for the weekly range, a very bearish trait. This group is a do not touch yet, as investors do not need to catch a falling knife, and should not be concerned about missing the first 5% higher. Try and capture "the meat of the move" over the long term. Be patient.

Leadership Revoked?

  • When the generals retreat that is often a telling sign. Can leaders be given a mulligan after a long advance? It is a tough question, but they should be given the benefit of the doubt. Below is the chart of XLNX and how it appeared in our 5/24 Technology Report. This was the undisputed chief in the semiconductor space for a long time, but has since underwent a precipitous drop and now sits 28% off most recent 52 week highs. It is a good example of being able to get better prices AFTER a powerful dive. The 4/25 slip of more than 18% on 4/25 after its most recent earnings reaction was sizable, and most likely caught long term bulls by surprise. However on 5/20 it registered a doji candle off an upward sloping 200 day SMA, representing a good risk/reward scenario for new longs. Treat that secular moving average as your line in the sand.

Examples:

  • There have been an abundance of new issues recently, which may be contributing somewhat to the overall weakness of the markets. Sure the high profile names have been soft, with LYFT and PINS down by 35 and 29% from their most recent peaks (LYFT advanced 5.1% Friday on a soft tape). Below is the chart of a name that came public at the wrong time, just before the overall market meltdown last fall, SVMK and how it appeared in our 5/29 Technology Report. It actually ROSE this week, albeit barely, by .6% and the last 3 weeks CLOSED very taut all within just .17 of each other. The stock advanced 1% Friday, finishing 5.3% off intraday lows on a sluggish tape. Keep this name on a close watch.

Special Situations:

  • Software giant higher by 22% YTD and 25% over last one year period. Dividend yield of 1.5%.
  • Down 4 of last 5 weeks, but rose 15 of 18 weeks ending between 12/28/18-4/26 advancing 39.8% top to bottom.
  • Four of last 5 earnings reactions higher by 3.3, 5.8, 1.8 and 1.6% on 4/25, 10/25, 7/20, 4/27/18.
  • Enter here on first touch of rising 50 day SMA since break above 108 cup with handle pivot on 2/15.
  • Entry MSFT here.  Stop 118.

  • Software play higher by 64% YTD, and just 3% off recent all time highs.
  • Ended 3 week losing streak this week, romping higher by 17.2% in best weekly volume since coming public.
  • Only three earnings reactions have been very STRONG higher by 18.2, 10.3 and 11.1% on 5/28, 2/25 and 11/28/18.
  • Enter on pullback into 41.86 cup base breakout pivot taken out on 5/28 at 42.50.
  • Entry PLAN 42.50.  Stop 39.

  • Semi laggard lower by 1% YTD and 32% over last one year period. Dividend yield of 2.3%.
  • Down 6 of the last 7 weeks, and 5 of the 6 CLOSED in lower half of weekly range. Now 36% off most recent 52 week highs.
  • Three of last four earnings reactions lower by 3.5, 8.1 and 5.4% on 5/3, 11/9 and 7/20/18.
  • Short here after break below bear flag pattern. Break carries measured move 35.
  • Entry SWKS here.  Buy stop 71.

  • Internet play higher by 13% YTD and 4% over last one year period.
  • First five week losing streak ever. Last 3 week did CLOSE very taut all within just 56. of each other.
  • Has CLOSED below 50 day SMA 14 straight sessions. Had not been below line since mid January.
  • Sell stop to short below head and shoulders pivot of 72.50. Break carries measured move to 62.
  • Entry GDDY 72.50.  Buy stop 75.

  • "Old tech" play higher by 12% YTD and lower by 10% over last one year period. Dividend yield of 5.1%.
  • Down 6 of the last 7 weeks, and all seven CLOSED in lower half of weekly range.
  • Making lower highs and lower lows for 27 months and now 18% off most recent 52 week highs.
  • Short back into bearish head and shoulders breakdown at 128.50. Break down carries measured move to 121.
  • Entry IBM 128.50.  Buy stop 134.

Good luck.

Entry summaries:

Buy initial touch of rising 50 day SMA after recent cup base breakout MSFT here.  Stop 118.

Buy pullback into recent cup base breakout PLAN 42.50.  Stop 39.

Short after recent bear flag breakdown SWKS here.  Buy stop 71.

Sell stop to short below bearish head and shoulders pattern GDDY 72.50.  Buy stop 75.

Short move into bearish head and shoulders breakdown IBM 128.50.  Buy stop 134.

This article requires a Chartsmarter membership. Please click here to join.

Semi Swoon:

  • Semiconductors are in nearly everything we use these days. Therefore they are often a genuine gauge of how well the technology group is doing. Rallies absent of them are thought of as illegitimate. Much discussion was made of the powerful 40% move off the late December lows. They have since given back half of that gain in rapid fashion, and this week completed a 4 week losing streak (just its second such streak since spring of 2016), with the last 3 CLOSING right at lows for the weekly range, a very bearish trait. This group is a do not touch yet, as investors do not need to catch a falling knife, and should not be concerned about missing the first 5% higher. Try and capture "the meat of the move" over the long term. Be patient.

Leadership Revoked?

  • When the generals retreat that is often a telling sign. Can leaders be given a mulligan after a long advance? It is a tough question, but they should be given the benefit of the doubt. Below is the chart of XLNX and how it appeared in our 5/24 Technology Report. This was the undisputed chief in the semiconductor space for a long time, but has since underwent a precipitous drop and now sits 28% off most recent 52 week highs. It is a good example of being able to get better prices AFTER a powerful dive. The 4/25 slip of more than 18% on 4/25 after its most recent earnings reaction was sizable, and most likely caught long term bulls by surprise. However on 5/20 it registered a doji candle off an upward sloping 200 day SMA, representing a good risk/reward scenario for new longs. Treat that secular moving average as your line in the sand.

Examples:

  • There have been an abundance of new issues recently, which may be contributing somewhat to the overall weakness of the markets. Sure the high profile names have been soft, with LYFT and PINS down by 35 and 29% from their most recent peaks (LYFT advanced 5.1% Friday on a soft tape). Below is the chart of a name that came public at the wrong time, just before the overall market meltdown last fall, SVMK and how it appeared in our 5/29 Technology Report. It actually ROSE this week, albeit barely, by .6% and the last 3 weeks CLOSED very taut all within just .17 of each other. The stock advanced 1% Friday, finishing 5.3% off intraday lows on a sluggish tape. Keep this name on a close watch.

Special Situations:

  • Software giant higher by 22% YTD and 25% over last one year period. Dividend yield of 1.5%.
  • Down 4 of last 5 weeks, but rose 15 of 18 weeks ending between 12/28/18-4/26 advancing 39.8% top to bottom.
  • Four of last 5 earnings reactions higher by 3.3, 5.8, 1.8 and 1.6% on 4/25, 10/25, 7/20, 4/27/18.
  • Enter here on first touch of rising 50 day SMA since break above 108 cup with handle pivot on 2/15.
  • Entry MSFT here.  Stop 118.

  • Software play higher by 64% YTD, and just 3% off recent all time highs.
  • Ended 3 week losing streak this week, romping higher by 17.2% in best weekly volume since coming public.
  • Only three earnings reactions have been very STRONG higher by 18.2, 10.3 and 11.1% on 5/28, 2/25 and 11/28/18.
  • Enter on pullback into 41.86 cup base breakout pivot taken out on 5/28 at 42.50.
  • Entry PLAN 42.50.  Stop 39.

  • Semi laggard lower by 1% YTD and 32% over last one year period. Dividend yield of 2.3%.
  • Down 6 of the last 7 weeks, and 5 of the 6 CLOSED in lower half of weekly range. Now 36% off most recent 52 week highs.
  • Three of last four earnings reactions lower by 3.5, 8.1 and 5.4% on 5/3, 11/9 and 7/20/18.
  • Short here after break below bear flag pattern. Break carries measured move 35.
  • Entry SWKS here.  Buy stop 71.

  • Internet play higher by 13% YTD and 4% over last one year period.
  • First five week losing streak ever. Last 3 week did CLOSE very taut all within just 56. of each other.
  • Has CLOSED below 50 day SMA 14 straight sessions. Had not been below line since mid January.
  • Sell stop to short below head and shoulders pivot of 72.50. Break carries measured move to 62.
  • Entry GDDY 72.50.  Buy stop 75.

  • "Old tech" play higher by 12% YTD and lower by 10% over last one year period. Dividend yield of 5.1%.
  • Down 6 of the last 7 weeks, and all seven CLOSED in lower half of weekly range.
  • Making lower highs and lower lows for 27 months and now 18% off most recent 52 week highs.
  • Short back into bearish head and shoulders breakdown at 128.50. Break down carries measured move to 121.
  • Entry IBM 128.50.  Buy stop 134.

Good luck.

Entry summaries:

Buy initial touch of rising 50 day SMA after recent cup base breakout MSFT here.  Stop 118.

Buy pullback into recent cup base breakout PLAN 42.50.  Stop 39.

Short after recent bear flag breakdown SWKS here.  Buy stop 71.

Sell stop to short below bearish head and shoulders pattern GDDY 72.50.  Buy stop 75.

Short move into bearish head and shoulders breakdown IBM 128.50.  Buy stop 134.