SOX channel?
An uptrend can be defined as a pattern that stays within a rising channel. Violating the lower channel-line, means the uptrend is over. But people can argue about where exactly the channel-lines should be drawn. It's sometimes clear only in retrospect. So, for instance, the December 29 SOX low at 198, could have been seen as breaking the uptrend, but then we went on to higher highs. On longer-term charts, the position of the trendlines can depend on whether you are using log or linear charts. Often, the stock prices will move slightly above or below the channel, and then go right back into the channel and resume the trend.
A second way of defining an uptrend: a series of higher ST highs, and higher ST lows. This is, IMO, more objective, since it doesn't depend on anything but the chart.
Beginning with the November lows, the SOX has had ST highs at 201, 224, and 235. The lows: 168, 179, 198, and 201 (today's intraday low). Notice, we haven't yet gotten below 198. If we bounce right here, it would be another higher low, and the uptrend would be intact.
A third way of defining an uptrend: a trend that stays above the 50 or 200 day moving average. The SOX bounced at the 50dma, yesterday and the day before, but then failed today.
I don't think it's been long enough since the November lows, for any certainty. I won't have any confidence in an uptrend, until we get above the 50dma, and successfully test it from above. Longer-term trends are more reliable than ST trends, and the trend since mid-2007 is down.
disclosure: I began buying back yesterday, nibbling on GE at 15, FAN at 12. Next buys: GE 14, FAN at 11, KLIC at 1.52, ASML at 14, all small increments. |
