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TAM's Pedagogics: March 10, 2011

|Includes: VanEck Vectors Semiconductor ETF (SMH)
Mid-day yesterday we posted 2 Pedagogics pointing out the potential break of the NDX’s Intermediate trend (broadening wedge, 50-DMA & neckline convergence). The 2nd posting depicted an IT-trend break of a secondary index (the SMH). This secondary index break increases the potential of the NDX break, which in-turn, could lead to ALL the 4 sisters running into trouble in the near term.
After technically evaluating the SMH I found greater resistance stemming from much further back; 9-years to be precise. 

SMH Weekly

(SMH Weekly chart) Here you can plainly see the Secular – 5 years plus – resistance (coinciding with the secular Floors & Ceilings) it has just succumb too. 

SMH Daily

Looking at the SMH daily chart, it has technically built a Stochastic Divergent Double Top with a confirmation of a neckline break at $34.50 with substantially increased volume.
If the increasing technical evidence proves to be trustworthy investors need to be prepared for the broader equity markets to follow suit.

NDX Daily