Thursday, August 16, 2007

The Semiconductor Holders

I want to address something I think needs some attention. I am hearing many talk about long tech/short financials. Which is a spread trade of which many can have merit. But before you run off thinking tech is a shelter in the storm please have a look over the following 3 charts. The chart is of the Semiconductor Holders (SMH) the tracking stock for the SOX index. As the semi's go so goes the Naz has been often said.

The above chart is the semi holders. on a montly basis. Please notice the 3 shooting stars. They often represent exhaustion moves and are a precurser to a move lower. For those inclined to heed warnings, well, this is your 3rd. Consider yourself warned.

The next chart (above) is of the semi holders on the weekly. Notice the 2nd shooting star also coincided with a kiss on the underside of the previous up trend line. Almost poetic. The 40 week ma is under assault as well.

The last chart (above) is the semi holders on a daily basis. As you can see the green up trend line is being violated today as I write. A close below it would be not be helpful if you are a bull on it. The 50 has been smashed and the 200 is toast.
Last but not least, we are in a bear market. DO NOT BUY THE DIPS ! Rallies are to be sold. Good trading to you.

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