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Semi's Looking for Leadership

The push lower in the broad markets starting in January was led by the semiconductor sector. The comments from analyst concerning peak earnings were the catalyst to the downside. That was long ago (four weeks) and many other problems have surfaced since. However, a technical look at the chart below shows a potential bottom developing on the chart. I have outlined what could be a double bottom and potential move higher.

The second leg higher off the second test of support is in play and a move above $45 would be the point to watch. Of course volume will be important on the move higher. As you can see on the chart volume has been lagging the last couple of trading days. Watch and plan your strategy according to the risk you are willing to accept in any play taken.

The down trend line (purple) is still in play and a break above this line would be important as well. Watch the 10 (green) and 20 day (red) moving averages as key break points as well to the upside. Be patient and let any potential plays develop. I would also pay attention to a failed breakout on the sector as well. A move below the previous lows (support) could provide a short opportunity as well. The current volatility in play can influence this sector over logic. Be patient and define your entry, stop and target before putting your money at risk.

Disclosure: Looking for move above $45