With this market, if you always thought with our guts, you would spend a lot of time puking. You have to step back and recognize leadership patterns. You have to recognize the trading ranges, the ABCD patterns, the inverted head and shoulders, the cup with handles, and the flag patterns that have formed after good surges to the upside. These are not selloff patterns these are profit taking and accumulation patterns. They are still bullish. I will try to think with my head even though my guts may be asking if I am sure about all this.
He definitely has me pegged... at least with the "puking" part.
My main reservation about the semi stocks that I look at, at any rate, is that they have all broken below their 50 day averages. The ^SOX has too, although as IH points out, the SMH seems to be an exception:
SOX. The SOX was up on the day almost 0.5%. It is still below its trading range. It is in the lower reaches where it was testing intraday and recovering in May through July. It is not out of the woods, but looking at the SMH (the ETF for the semiconductors a broader group) it is still inside of its range. It did not get much of the bounce, but it is trying to move up again. As with all of the indices, they holding inside their four-month trading range, and that is important.
Not sure what to make of that. But, FWIW, Lipacis of MS who has been very bearish for many months now just came out with a report that suggested that while we may not have hit absolute bottom, the first earnings earnings downgrades in the sector have started to come in, which suggests at least that the bottoming process has begun. It struck me as an odd report, but I'll try to post some of it tomorrow. He didn't say how far the bottoming process will go....
EDIT: I'm not sure what chart he's looking at, but according to this Yahoo chart, the SMH has broken its support lines as well:
finance.yahoo.com
The 50 day is 27.23, the 100 day is 27.34, and the 200 is 26.83, with the SMH itself closing on Friday at 25.99. Hard to see how it could hold up that well when over 34% of it is INTC and AMAT, with TXN another 20%+: finance.yahoo.com |
