Semiconductor Reversal?
The semiconductor space has been a laggard within tech and last week was a big contributor to the overall group’s weakness against the market (the SMH and IGV were down 1% last week with the S&P 500 up by the same amount). The XLK was flat and only bested energy finishing 10th of 11 in the major S&P sector ranking last week. In fact, over the last month, it is essentially flat as well. Is the sector resting before a big December? Getting back to the semis in November the SMH rose 3%, compared to a historically very powerful 13.3% over the last 4 years. Will it make up for lost ground into year-end? Of course, no one knows but the daily chart needs to distance itself quickly from the rising 200-day SMA next week. It has been lingering near the line for the last 10 sessions and that should give investors some pause. I think one can start long here and add to on strength. The MONTHLY chart shows very taut trade, a hallmark bullish trait, with the last 5 months CLOSING with a 240 handle. But bears will point out the fatiguing candles with a doji in August followed by three consecutive spinning top candles which suggest some possible back and filling toward the rising 50-MONTH SMA last touched two years ago with a bullish morning star (circled). There are some green shoots with some individual names performing well including SMTC, which next week has the chance to complete a bull flag. A break above 67 would carry a measured move to the round 80 number.