Semis Sizzling:

  • At first glance the 45% gain for the SMH in 2020, may look "pedestrian" (in line with software via the IGV YTD), but it has added 127.5% from the March lows. During the March depths, the ETF never CLOSED below the very round par number, even though the 3/17-18 sessions were each below 100 by at least 3% intraday. Most impressive recently may have been the UNCH finish for the week ending 11/13, after the prior week added nearly 13% (the week ending 11/13 was also accompanied by larger than average WEEKLY volume, meaning bears tried hard to push the space lower but were largely unsuccessful). The consolidation the in arena was active with three major purchases by AMD, ADI and MRVL. And each of those three is well higher from the announcement of the news. Look for this to carry into 2021. Stocks do a ton of due diligence before buying another name in the group, and to me thats about as bullish as you can get, when peers see big value in rivals.

Hidden Gem?

  • Quite often IPOs are overlooked. Many want to give the stock time to form a base before entering, with lockup periods forthcoming not long after coming public. This lack of attention could often be an individuals advantage. If the stock comes public in a strong group, it gets bonus points. Below could be a good example with the chart of ALGM. The semiconductor play advanced 5 of its first 6 weeks of trade, with 4 of the 5 gainers advancing by double digits, including a powerful jump of more than 31% the week ending 11/6. This week ending a 3 week losing streak, rising 7.5%, great relative strength trampling the gain of 1.7% for the SMH. Below is the daily chart that looks constructive, and on its WEEKLY chart it has the look of a bull flag. A break above a WEEKLY bull flag of 29 carries a measured move to 41.

Recent Examples:

  • The semiconductor space was to be cheered for its action in 2020. The SMH rose by nearly 45% YTD, but many leaders dwarfed the ETFs advance. They include YTD moves of more than 100% from names like LSCC CREE MTSI NVDA and MPWR. Look for the space to witness more consolidation in 2021. Below is a play that for a good portion of 2020 did not trade in line with the group in MU, and how it appeared in our 12/23 Technology Note. It however did make up for lost time as it broke above a WEEKLY cup base pivot that aligned with the round 60 number the week ending 11/20 in a base that was 9 months in duration. We know the longer the base the greater the space, so this nascent move could just be getting started. On the chart below we suggested an entry at the round 70 number and an add on through a 75 bull flag formation. That occurred Thursday to end 2020, Do not be surprised if 2021 is very kind to this chart.

Special Situations:

  • Semiconductor play higher by 79% in 2020. Dividend yield of .5%.
  • Higher just 6 of the last 13 weeks, but just 2% off most recent all time highs. Last 3 weeks all CLOSED very taut, all within just .49 of each other.
  • Last earnings reaction fell 4.7% on 12/4, but prior 3 all rose, up by 6.8, 8.8 and 10.4% on 8/28, 5/29 and 3/5
  • Enter with buy stop above bull flag.
  • Entry MRVL 48.25.  Stop 46. 

  • Semiconductor play higher by 47% in 2020.
  • Just 2% off most recent all time highs, and this week rose 11.9% on best WEEKLY volume in nearly 6 months. Excellent relative strength as XLK rose fractionally this week up .8%.
  • 5 of last 6 earnings reactions up by .4, 8.4, 20.6, 10 and 1.6% on 11/6, 8/6, 2/7, 11/8/19 and 8/9/19 (fell 2.3% on 5/8).
  • Enter on pullback into WEEKLY cup base breakout.
  • Entry SYNA 95.  Stop 89.

  • German software laggard LOWER by 3% in 2020. Dividend yield of 1.3%.
  • Still 23% off most recent 52 week highs. Week ending 10/30 fell by 28.6% in largest WEEKLY volume in at least 5 years. Up 6 of last 9 weeks, but each successive gaining week came in softer trade.
  • Earnings mostly lower, down 23.2, 5.3 and 2.8% on 10/26, 4/24 and 1/28 (rose 3.9% 0n 7/27).
  • Enter short into recent bearish dark cloud cover candle.
  • Entry SAP 132.  Buy stop 137.

Good luck.

Entry summaries:

Buy stop above bull flag MRVL 48.25.  Stop 46.

Buy pullback into WEEKLY cup base breakout SYNA 95.  Stop 89.

Short into bearish dark cloud cover candle SAP 132.  Buy stop 137.

 

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Semis Sizzling:

  • At first glance the 45% gain for the SMH in 2020, may look "pedestrian" (in line with software via the IGV YTD), but it has added 127.5% from the March lows. During the March depths, the ETF never CLOSED below the very round par number, even though the 3/17-18 sessions were each below 100 by at least 3% intraday. Most impressive recently may have been the UNCH finish for the week ending 11/13, after the prior week added nearly 13% (the week ending 11/13 was also accompanied by larger than average WEEKLY volume, meaning bears tried hard to push the space lower but were largely unsuccessful). The consolidation the in arena was active with three major purchases by AMD, ADI and MRVL. And each of those three is well higher from the announcement of the news. Look for this to carry into 2021. Stocks do a ton of due diligence before buying another name in the group, and to me thats about as bullish as you can get, when peers see big value in rivals.

Hidden Gem?

  • Quite often IPOs are overlooked. Many want to give the stock time to form a base before entering, with lockup periods forthcoming not long after coming public. This lack of attention could often be an individuals advantage. If the stock comes public in a strong group, it gets bonus points. Below could be a good example with the chart of ALGM. The semiconductor play advanced 5 of its first 6 weeks of trade, with 4 of the 5 gainers advancing by double digits, including a powerful jump of more than 31% the week ending 11/6. This week ending a 3 week losing streak, rising 7.5%, great relative strength trampling the gain of 1.7% for the SMH. Below is the daily chart that looks constructive, and on its WEEKLY chart it has the look of a bull flag. A break above a WEEKLY bull flag of 29 carries a measured move to 41.

Recent Examples:

  • The semiconductor space was to be cheered for its action in 2020. The SMH rose by nearly 45% YTD, but many leaders dwarfed the ETFs advance. They include YTD moves of more than 100% from names like LSCC CREE MTSI NVDA and MPWR. Look for the space to witness more consolidation in 2021. Below is a play that for a good portion of 2020 did not trade in line with the group in MU, and how it appeared in our 12/23 Technology Note. It however did make up for lost time as it broke above a WEEKLY cup base pivot that aligned with the round 60 number the week ending 11/20 in a base that was 9 months in duration. We know the longer the base the greater the space, so this nascent move could just be getting started. On the chart below we suggested an entry at the round 70 number and an add on through a 75 bull flag formation. That occurred Thursday to end 2020, Do not be surprised if 2021 is very kind to this chart.

Special Situations:

  • Semiconductor play higher by 79% in 2020. Dividend yield of .5%.
  • Higher just 6 of the last 13 weeks, but just 2% off most recent all time highs. Last 3 weeks all CLOSED very taut, all within just .49 of each other.
  • Last earnings reaction fell 4.7% on 12/4, but prior 3 all rose, up by 6.8, 8.8 and 10.4% on 8/28, 5/29 and 3/5
  • Enter with buy stop above bull flag.
  • Entry MRVL 48.25.  Stop 46. 

  • Semiconductor play higher by 47% in 2020.
  • Just 2% off most recent all time highs, and this week rose 11.9% on best WEEKLY volume in nearly 6 months. Excellent relative strength as XLK rose fractionally this week up .8%.
  • 5 of last 6 earnings reactions up by .4, 8.4, 20.6, 10 and 1.6% on 11/6, 8/6, 2/7, 11/8/19 and 8/9/19 (fell 2.3% on 5/8).
  • Enter on pullback into WEEKLY cup base breakout.
  • Entry SYNA 95.  Stop 89.

  • German software laggard LOWER by 3% in 2020. Dividend yield of 1.3%.
  • Still 23% off most recent 52 week highs. Week ending 10/30 fell by 28.6% in largest WEEKLY volume in at least 5 years. Up 6 of last 9 weeks, but each successive gaining week came in softer trade.
  • Earnings mostly lower, down 23.2, 5.3 and 2.8% on 10/26, 4/24 and 1/28 (rose 3.9% 0n 7/27).
  • Enter short into recent bearish dark cloud cover candle.
  • Entry SAP 132.  Buy stop 137.

Good luck.

Entry summaries:

Buy stop above bull flag MRVL 48.25.  Stop 46.

Buy pullback into WEEKLY cup base breakout SYNA 95.  Stop 89.

Short into bearish dark cloud cover candle SAP 132.  Buy stop 137.