Stock Chart SMH

Posted by downtowntrader | 2/17/2009 01:04:00 AM | 0 comments »

Stock Chart Analysis SMH

Semiconductor HOLDRs (ETF)(Public, NYSE:SMH)

I wrote on the semiconductors a few weeks ago, and how they were looking strong to me. I've kept my eye on the group since then, and they continue to look better as a sector than most of the general markets. The Nasdaq has been outperforming the Dow and S&P500 and part of that credit is due to the semiconductors. The problem is that the financials seem hell bent on dragging everything down with them. If the general markets end up rallying from this consolidation, then I feel that semi's will be one of the leading groups.

Many semiconductor stocks have similar charts showing possible double bottoms. In looking at the chart for SMH, it is showing more of a triangle like consolidation. The 20 and 50 day moving averages are starting to curve higher and have supported the last two dips. SMH is an interesting position here as a solid move over 19 should lead to a breakout that challenges the declining 200 day sma more than 20% away. This is a pretty good reward based on the risk needed to take this trade.

Right now it looks like the markets are set to gap lower tomorrow morning so it may wipe this trade out altogether. However, if it holds the current levels after the upcoming weakness, then I will be more optimistic of a pending breakout.

Good Trading,