We highlighted AMAT in an NFTRH+ update on October 22. I bought it as a laggard ‘catch up’ play after taking profits on the SMH Semiconductor ETF. I then took profits too soon on AMAT, but that’s me all too often.
Here is one of 2 charts used (a daily and a weekly) in the original update. I have turned the RSI green and added a resistance zone to the chart. The original target was 18 and the trade should be ending for those who took it as a trade.
It was hard to buy the Semis (SMH) at the September low but somebody had to do it. Now the technical traders are getting on the Semi sector. Good for them, they are momentum chasing technical fly boyz.
People think I am a chart guy but a chart is only part of the story and IMO those who think of charting as a stand-alone discipline in trading or investing are another flavor of the various cults and casino patrons that populate the financial markets.
Sure, the daily SOX has an intriguing little bullish looking pattern but the weekly is not so bullish. We covered this and a brief fundamental take (book-to-bill ratio) in a public post at nftrh.com yesterday and in a more detailed NFTRH update the day before. I have also ‘channel-checked’ with a former colleague and I’ll be sharing his ‘boots on the ground’ information in NFTRH 371 this weekend.
The Semi equipment sector (AMAT, LRCX, KLAC, etc.) was the bullish economic canary in January 2013 and it could be setting up that way again, this time going the other way. Funny how the fundamentals are turning even as many of these stocks rip higher. Good old Wall Street (cue our Feb. 2014 criticism of the 3D Printing promotion):
3D Printing; No Barrier to Future Losses for Investors
This is another somewhat sermonizing post from your friends at biiwii.com simply asking you to realize that the market is an ecosystem of technical and fundamental analysis. Just ask shell shocked gold traders all these years later. Fundamentals matter, and we had a big positive one out of the forward-looking Semi’s in January 2013. Now we have a whole other kettle of chips.
Hey, have a great Thanksgiving if you are celebrating!
US Stock Market: Anatomy of a Correction
Over the last week we (NFTRH) have used market sentiment indicators and index charts to gauge the prospects of finding a high on the post-September relief ‘bounce’ rally.
During August and September market sentiment had become brutally over bearish and this was very dangerous from the bears’ perspective. We set upside bounce targets for the SPX at 2020, 2040, 2060 and 2100. The first three were resistance levels (broken support) and the last was the general measurement of the ‘W’ bottom that formed in August and September. With the extremes in bearish sentiment, it was not so surprising that SPX climbed all the way to just above 2100.
Well, as we have noted in weekly reports and in-week updates recently, that problem for the bears was methodically eliminated by the rally as bulls’ backbones firmed up very well to the point of strenuous (though not hideously extreme) over bullishness. Here is one chart (courtesy Sentimentrader.com) among many sentiment graphics and data points we used in an NFTRH update on November 4. We had been watching pessimism dissipate quite nicely, but now the other component – rapidly growing optimism – was kicking in as well. This would pave the way for a correction from a sentiment standpoint.
As a ‘look ahead’ we then used and continually updated this 60 minute chart of the SPX beginning with an update called What to Look for w/ Respect to the 1st Signs of a Market Breakdown in order to be prepared to view the very first inkling of what a correction might look like, now that sentiment was coming in line. The ensuing string of updates also included daily charts of SPX for viewing forward-looking support parameters in the event that the market did have an initial breakdown (per the 60 minute view).
Continue reading Anatomy of a Correction
Post-Draghi, we set targets for the STOXX 50 at 3600 and the Euro hedged HEDJ fund at 63 (+/-). This was part of a post at NFTRH.com talking about…
Here’s the Problem for the Gold Sector with respect to a global relief pump fest.
Today we have HEDJ at 62 and counting. Maybe it can fill those gaps up there around 65. But this is either an epic, policy maker inspired suck in or the start of a global party. The parameter is close at hand, as in the US. Everybody’s getting bullish. Just as planned.
Well, there are way too many tools whirring along readying their signals to just depend on a single market or indicator, but I think the Small Caps are a good one none the less. Earlier in the week we looked at this daily of the Russell 2000. It is still holding the key 1180 area. A successful hold of support targets 1280.
Here is a weekly view using a chart of IWM (RUT ETF) that was posted a while back. It is a little less reassuring as it has not made a weekly close above resistance and is pausing at the EMA 45, which used to support the bull and resisted the bounce most recently.
The Russell 2000 used to be a post-2012 leader. Now, not so much. So what’s next, catch up move with manic bulls taking the market higher or the other thing (you know, the thing that fewer and fewer participants have been considering likely lately)? Eh Bueller?
Yes, by all means let’s raise interest rates because well, we have to be perceived as willing to normalize. But let’s keep QE 4 in our back pocket just in case because the US dollar, which we have been obsessing about lately must be contained somehow against Draghi’s European devaluation and others. Mustn’t it?
As to the post’s title, here is Faro getting destroyed today on its (lack of) earnings results. This company, unlike the 3D Printing scam, is indeed viable as a unique and high quality supplier to US and global manufacturers of all kinds. I have it categorized under the machine tools umbrella (though it’s really a special interest in multi-axis automated measurement), which we have shown again and again is in trouble. Most recently Machine Tool Orders Slip Again… Who’s Surprised? Didn’t Think So…
So it is not just the scams and the weak links that are falling down. Faro is a great company with a great product aimed at many different industries.
The current situation, where services are still going strong, echoes the run up to 2000 doesn’t it? Back then we had ‘King Dollar’, did not need manufacturing, had all kinds of great internet and optical networking companies ready to change the world (well, they did but…) and new economy. It is not sustainable.
From NFTRH 367 as RUT sat around 1160: “This pattern targets 1280 if resistance is exceeded. So for all you momo bull traders out there, watch 1180 but be nimble.”
That is only the most tentative of support right now, but so far so good for the momo’s.
A post on Wednesday wondered if 2040 to 2060 resistance or the pattern’s measured target* of 2100 would win out. Barring a quick reversal, it’s going to 2100 short-term.
Doesn’t it always seem to go this way with the stock market? In the depths of despair such a thing is unimaginable and now the wise guys are all out with sermons about why people should not be doom and gloomers. And so far they are right. Now what about comps 1, 2 & 3 that we reviewed by weekly charts? 2 out of 3 (2000, 2008) are bearish and 1 (2011) is very bullish.
Interestingly, I have noticed a lot of technical chatter out there about the similarities of the current situation to 2011 but not nearly as much talking about 2000 or 2008. Funny how sentiment works, eh?
I am trying to learn to adapt my bottom feeder ways and somehow stomach the momo environment, unhealthy sentiment and all. I started by rotating out of what big momo’s I had and settled into some laggards/chart spec’s.
* Speaking of measured targets, STOX/HEDJ are already a big chunk of the way there and I am not chasing that momo at this time although I still want to write up Europe this weekend for future reference.
Obligatory preamble: I have had my share of clunkers. Indeed, yesterday’s NFTRH+ update on Boston Scientific (BSX) got knocked down by 4.5% today and Applied Materials (today) is a ‘we’ll see’ on a bottom feed Semi equipment situation.
But NFTRH 361 did an initial ‘+‘ chart highlight on AMZN a few weeks ago and then updated it on Sunday using this simple chart. At 626 in after hours it is above the conservative target zone.
The only reason I pay attention to this company is because I am a very satisfied Amazon Prime customer. I just like well run businesses. I also like nice chart consolidations. I am also selling their stock today.
Reason number 1,698,274 why when some chart guy talks in grave tones about a DEATH CROSS (of the MA 50 below the MA 200) having any lasting impact you should run, not walk the other way… quickly. This one actually was pretty well in alignment with the Semiconductor index’s mini crash, but if you look at the Dow, SPX or NDX you see that the signal came either right when it was time to buy or after.
The target on the SOX has been 700 or higher. I am still long (SMH) as the sector led the way down and has been leading the way up on the bounce.  Taking the profit on SMH and using part of those funds for an individual Semi stock speculation.