Hi Rts,
...Believe me your analysis was one factor that has kept me out of a great deal of losses that I might have booked by shorting stocks associated with this industry on this latest run...
One would hope that this is a major reason we frequent this thread, too help each other out! I greatly appreciate the discussions and information posted here, even when I don't agree with them.
For a simple recap: the SOX dropped 430 points during the '02 washout phase (a decline of roughly 2/3rds). It bounced up 180 points, back down 130 pts and is currently in an upward move that, so far, has registered a healthy 120 point move up (or a complete retrace of the previous drop). My interpretation of many different SOX charts and indicators leads me open to the possibility that the current SOX up move could get as high as the 480 level (of course, not overnight but over the course of another month or 2). I think the SOX will need a lot of buying support to get through the 390-400 area and I'm not sure the rally has enough strength to take this area out at this time. With this in mind, I could see a lot of sideways movement or simply an exhaustion retrace here before another strong up move. We have seen extremely strong breadth associated with this rally and there are so many individually bullish semi company charts that it's foolish to ignore what these are suggesting to us: we are seeing buying across the board.
stockcharts.com
With the above in mind, I still hold onto my previous view: until the current up trend line is broken to the downside, the bullish bias should stay in place for the index as a whole. (Note: there are always individual issues that will buck the trend or which have moved too high, too fast and these should be the stocks chosen for shorting-when the bias is bullish-but these often carry the highest risk). However, as we approach the major resistance levels, like we saw today, pullbacks should be not only expected but are a great short term opportunity to play the "dark side".
So, there's my opinion, fwiw. How about everyone jumping in and giving us their 2 cents worth?
Best regards to all,
mh |
