| Are you sure that article isn't from Jan 28? The SOX 50 day moving average is at 513.77 and the index closed today at 493.35, barely off the intraday low of 493.04. At no time today did the SOX trade above its 50 day moving average. In fact, the 50 day has provided resistance for the last four trading days. The last time the SOX closed above its 50 day moving average was Jan 27 when it was at 515.41 and the SOX closed at 517.42. The next day, Jan 28, the SOX opened just above the 50 day moving average, bounced about 15 points, and settled just below the average. The only positive in the short term chart is that it is more oversold today than at any time in the last 12 months. It could rally from this oversold condition since the intermediate term trend is strongly up, but like I said the other day, it is possible that the SOX has topped out for this business cycle. I don't have a lot of confidence in calling a top yet because it hasn't bounced since it hit its high. If the SOX rallies, makes a lower high than 560.68 (the high for this cycle), and subsequently takes out the low for the current move, you can probably say goodnight to semiconductor stocks. My guess at support is about 480, which is only about 13 points (2.6%) below today's close. I think that there is a high probability that the SOX will rally from the current oversold condition because of the strong up trend that is in place. I don't think that bulls will give up that easy, and could support stocks on this first dip. |
