Applied Materials Runs to Target
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!
We noted in an NFTRH update that the Semi’s were conspicuous in their strength yesterday. That was a good forebear for today’s broad strength. The Semi’s have been a leader since they brought the whole mess out of the late 2012 doldrums. Here is Semiconductor sector ETF SMH with an improbable (and very doable, market willing*) target.
SMH broke the neckline, tested it and popped.
* It is highly doable assuming that our view that the bearish stuff is probably in interuptus for several weeks at least is correct. In other words, it’s all part of the relief bounce scenario within a larger bearish picture.
In the interest of maintaining the tradition of highlighting my failures I will note that there was an NFTRH+ update on Intel based on the H&S pattern. My personal risk tolerance was above 29 (neckline), which was also noted as a tight stop loss level in the update (it is critical to limit losses because they sure are going to happen) and so I took a small loss.
But the bull case is not yet proven either as the baby Inverted H&S, while cute, has not broken above its neckline. It’s target is around 33 if it does break through. MACD and RSI look good.
You may recall that we were bullish on Intel and the Semi sector since before anyone started getting excited about the Semi’s, as Intel broke above a 14 year resistance line. Now I am neutral on Intel and indeed, the Semi sector pending the broad market view, which continues to go amazingly well to our post-August layout.
It has been a while since we went around DARPA’s creation (or was it Al Gore’s?) of networked thingamajigs…
NFTRH 355 takes the balls in the air, tops spinning on the table and the up and down market whipsaw and attempts to distill it all into a sensible narrative for this very moment and what is out ahead.
In that it provided me with everything I need with respect to my parameters and risk tolerance for the short and long-terms, it did its job very well. I think others will find that to be the case too.
As we await the Semiconductor Equipment sector’s Book-to-Bill data for June, we observe that Semiconductor sector leadership (SOX-SPX) is still intact in the US stock market.
This sector is noteworthy because it was a real indicator in early 2013 of the general strength to come in manufacturing (Semi Equipment cycles often do that) and later, employment and the ‘services’ economy.
Today SOX-SPX rests at a decision point and the bulls have the ball as long as that point is not violated. The answer here will be especially important given that its 2013 indicator running mate, Palladium-Gold, is very bearish now.
In NFTRH 351 we had an extensive look at the Semi sector including its nominal technicals, its market leadership status and a potential setup that could be in play if my read on its fundamentals proves out. FWIW, here is the status of the Semiconductor sector’s leadership.
Since Q4 2012 SOX has led the S&P 500, which makes sense since Q1 2013 was when we became alerted to the Semi Equipment sector’s ramp up (which in turn was an early economic signal). 3 times since the circus last October centered around Microchip Semi’s outlook brain fart SOX’ leadership became over done and now the question is, has it been over done to the downside yet again?
All trends end sometime, but as of now this one is completely intact.
A good report, as usual. That may sound smug but #348 is another report helped me personally because as usual I don’t go into these things so much trying to put what I think down on virtual paper. I go into them seeking answers or at least, clarity. Check.