Semis are Trying to Bottom
Semiconductor stocks sit at the intersection of growth and technology. Last year their location was perfect. Growth stocks were booming, and technology was the hot sector. This year? Not so much. If you’ve been following our Halftime Reports and weekend Scouting Reports, then you know we haven’t thrown much love toward chip stocks lately.
Their souring price charts have demanded as much.
But on May 19th, something changed. Did you spot it? The Semiconductor ETF (SMH) gapped down hard at the open, only to rip higher throughout the session. In the process a bullish engulfing candle formed. The Nasdaq looked similar. What’s more, volume surged which showed institutions piling in.
As a result of the potent reversal candle, I highlighted semiconductors as one of my picks in the May 19th Trade Masters. The follow through we saw on May 20th confirmed the legitimacy of the prior day’s runup.
This is what clear technical signals look like. And it’s why we’re advocates of chart reading if you’re in the business of timing markets. Time will tell if buyers can press their newfound advantage, but there’s no denying SMH looks better now than it has at any time over the past six weeks.
Chart of the Day
Bulls Return to Semiconductors
SMH held support at $224 with a high volume bullish engulfing candle. That’s short-term bullish and should scare sellers away for a spell.
Video of the day
What is Support?
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