Weakness In Semiconductor Stocks Is An Economic Warning

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Includes: AVGO, INTC, NVDA, QCOM, SOXX, TXN
by: Richard Suttmeier

Summary

The iShares PHLX Semiconductor ETF has been under a downtrend since setting its all-time high on March 13.

Broadcom is the largest component of the SOXX and it peaked in December.

Intel is oversold and in bear market territory and is well below its August 2000 high of $75.81.

Qualcomm has become an “inflating parabolic bubble” and is below its January 2000 high of $100.00.

NVIDIA is the best performer so far this year, while Texas Instruments peaked on Jan. 23 and has been under a downtrend since then.

The best measure of the performance of semiconductor stocks is the iShares PHLX Semiconductor ETF (NASDAQ:SOXX).

The demand for semiconductors is an important indicator of economic strength as almost every durable good we buy contains computer chips from our smallest Internet-enabled device to the automobiles we drive. The five largest components of the semiconductor ETF show different chart characteristics based upon the chip segment within which they operate.

I will provide a scorecard for semiconductor stocks, their weekly charts and key trading levels without focusing on the different fundamental factors.

Here Is The Semiconductor Stock Scorecard

Scorecard For The SOXX And Five Largest Components

iShares Semiconductor ETF

Weekly Chart For The SOXX

Courtesy of MetaStock Xenith

The weekly chart for the semiconductor ETF is neutral with the ETF below its five-week modified moving average of $185.95. The 200-week simple moving average or "reversion to the mean" lags at $126.14. The 12x3x3 weekly slow stochastic reading is projected to uptick to 63.26 this week, up from 62.20 on Sept. 21. The downtrend resistance is at $192.41.

Investors should buy weakness to my semiannual value level of $170.86 and reduce holdings on strength to my monthly risky level of $196.84.

Broadcom, Inc. (NASDAQ:AVGO)

Weekly Chart For Broadcom

Courtesy of MetaStock Xenith

The weekly chart for Broadcom is positive with the stock above its five-week modified moving average of $233.09. The 200-week simple moving average or "reversion to the mean" lags at $184.77. The 12x3x3 weekly slow stochastic reading is projected to rise to 57.86 this week 45.14 on Sept. 21. The downtrend resistance is at $264.19.

Investors should buy weakness to my annual value level of $221.29 and reduce holdings on strength to quarterly risky level of $293.86.

Intel Corp. (NASDAQ:INTC)

Weekly Chart For Intel

Courtesy of MetaStock Xenith

The weekly chart for Intel is negative but oversold with the stock below its five-week modified moving average of $47.42. The 200-week simple moving average or "reversion to the mean" lags at $37.48. The 12x3x3 weekly slow stochastic reading is projected to end the week at 17.47, below the oversold threshold of 20.00.

Investors should buy weakness to my annual pivot at $44.31 and reduce holdings on strength to my quarterly risky level of $51.55. My semiannual pivot remains a magnet at $46.78.

Qualcomm, Inc. (NASDAQ:QCOM)

Weekly Chart For Qualcomm

Courtesy of MetaStock Xenith

The weekly chart for Qualcomm is positive but overbought with the stock above its five-week modified moving average of $69.43. The 200-week simple moving average or "reversion to the mean" lags at $59.90. The 12x3x3 weekly slow stochastic reading is projected to end the week at 90.56, well above the overbought threshold of 80.00 and above 90.00 as an "inflating parabolic bubble."

Investors should buy weakness to my quarterly value level of $64.16 and to reduce holdings on strength to my annual risky level of $77.71.

NVIDIA Corp. (NASDAQ:NVDA)

Weekly Chart For NVIDIA

Courtesy of MetaStock Xenith

The weekly chart for NVIDIA is neutral with the stock above its five-week modified moving average of $265.15. The 200-week simple moving average or "reversion to the mean" lags at $107.92. The 12x3x3 weekly slow stochastic reading is projected to slip to 72.68 this week, down from 75.21 on Sept. 21.

Investors should buy weakness to my semiannual value level of $212.29 and reduce holdings on strength to my quarterly risky level of $287.75.

Texas Instruments, Inc. (NASDAQ:TXN)

Weekly Chart For Texas Instruments

Courtesy of MetaStock Xenith

The weekly chart for Texas Instruments is negative with the stock below its five-week modified moving average of $109.63. The 200-week simple moving average or "reversion to the mean" lags at $75.06. The 12x3x3 weekly slow stochastic reading is projected to slip to 36.46 this week, down from 36.40 on Sept. 21. The downtrend resistance is at $116.76.

Investors should buy weakness to my annual value level of $90.95 and reduce holdings on strength to my monthly risky level of $113.70. My semiannual pivot is at $107.16.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.