With Gold (NYSEARCA:GLD) reaching all-time highs again this week more investors are putting cash into anything precious metal related but I am here to caution you on doing so. There are far better opportunities than gold right now and chasing this trend is not the formula for generating short-term growth. We have traded GLD call options 8 times this year (7 profitable) in the ETF TRADR portfolio but now it’s time to step away. Of course, what type of ‘tradr’ would I be if I failed to offer a better alternative.
First off, it would be very difficult to find a long-term chart more strong and persistent than the Gold chart - it’s nothing short of amazing (and at the same time scary for the future of the dollar). That said, even as Gold has made new highs in recent days there is a better place to focus your trading capital. The semiconductor industry has lifted off in recent days and I expect it to continue. Here’s the performance chart between the headline-making Gold (GLD) rally and the Semiconductor ETF (NYSEARCA:SMH).
So what’s making the semis perform so well? It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead. It was just three weeks ago when Intel (NASDAQ:INTC) slashed their outlook sending the stock down nearly 4%. Others like Cisco have also expressed concern with speak of “unusual uncertainty” in the global economy that could impact sales. If these headlines weren’t enough many analysts also believe Apple’s iPad is hurting sales of the Semiconductor Industry because the chip is Apple branded and made by Samsung who is not a major Semiconductor. The major players are not benefiting from this particular increase in chip demand. Bottom line, here’s what is making semiconductors (SMH) move.
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In a classic contrarian move Semiconductors shifted in to high gear directly after the industry leader (INTC) lowered their outlook. SMH has one of the strongest ETFs trends in September and I believe it will continue. Let’s take a look at the SMH charts to see the how the ETF is trading. We’ll take a look at the following:
- Current Trend Analysis (how strong is this trend and how much further can it go)
- Resistance and Support Levels
- How to Enter with a Lower Risk Profile
Disclosure: no positions