Semiconductors are the backbone of modern electronic equipment, and also includes a growing increase of the weighting in many investors ‘ portfolios. In this article, we will take a look at several maps of everywhere in the niche market of sub-sectors and try to determine how the operators are positioning themselves on the weeks or the months to come.
the iShares PHLX semiconductor ETF (SOXX)
Many traders that want exposure to niche segments such as semi-conductors often turn to exchange-traded funds like the iShares PHLX semiconductor ETF (SOXX). For those who are unaware, the fund provides targeted access to 30 U.S.-based companies, which focus their activities on the design, manufacture and distribution of semi-conductors.
Taking a look at the chart below, you can see that the price has rallied strongly since the March lows and the anticipated support from its 200-day moving average. Recent momentum has also resulted in a break above the horizon 2020 swing high of $267.85, which has also triggered a bullish crossover between the 50-day and 200-day moving averages (indicated by the blue arrow), which is a common sign used by followers of the technical analysis to mark the beginning of a major upward trend. From a risk management perspective, stop-loss orders will probably be placed below $235.51 to protect against a sudden change in fundamentals or market sentiment.
QUALCOMM Incorporated (QCOM)
As the top of the holding of the SOXX ETF, QUALCOMM Incorporated (QCOM) is likely to be one of the companies of semi-conductor who catches the object of many traders over the coming weeks. As you can see on the chart, the price has recently broken above its 200-day moving average and has also triggered a bullish crossover between the long-term moving averages (represented by the blue circle).
The popular buy sign, also known as the golden cross, could be a catalyst to continue the upward movement over the next few weeks. Stop-loss will probably be placed below $83.30 or $80.88 to protect against a decline, according to the risk tolerance and investment horizon.
Intel Corporation (INTC)
As one of the best manufacturers of semi-conductors and a holding of the SOXX ETF, Intel Corporation (INTC) also seems well positioned to make a move higher in the weeks to come. The period of the consolation near the 200-day moving average will likely be used by traders to suggest that the bulls are in control of the long-term trend, are likely to be close to support as a guide to buy and place stop orders.
Based on this model, the purchase orders will likely be placed too close to current levels as possible to take advantage of the risk/reward, while protecting against the surprises of variations in the sense in placing the stop below $57.61. Traders will also likely use the bullish crossover between the moving average convergence divergence (MACD) in histogram MACD and its signal line (represented by the blue circle) as confirmation of a move higher.
The Bottom Line
The by-products of the work done in the sector of semi-conductors to provide today’s society with the key elements of the technology that the duration of each important facet of the lives of many people. Based on the maps discussed above, it is obvious that this niche sector to gain momentum and gain widespread position in the portfolios of many traders.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.