Semiconductors: From Wonder Woman to Mistress of Gloom

March 23, 2019

Mish's Daily

By Mish Schneider


Most of the past week, we focused on Semiconductors SMH.

Beginning with the Moody Little Sister last Wednesday, SMH was indeed was the sector of the Modern Family to watch.

Last Thursday, SMH opened higher and continued its ascent to the highest level it had been since June 2018.

What troubled us, hence the Thursday Daily’s warning about feeding the bulls artificially flavored green Jell-o, was that all the other sectors of the economic Modern Family did not join their sister’s party.

On Friday, SMH opened under 110, which in the ETF section I listed as the super pivotal number.

Naturally, given that the Russell 2000, Regional Banks, Retail and Transportation were already much weaker relative to SMH, the selloff began.

Once SMH broke under 108, our sister turned to the dark side.

Nevertheless, the Mistress of Gloom with a goth-like face, kept her party dress on.

Incredibly, by the end of Friday, all that happened in SMH was an inside day (when the trading range of the day is inside the trading range of the day prior.)

However, SMH managed to sufficiently spook the rest of the Modern Family.

Will Monday bring more goth or another round of popular culture?

In the Modern Family weekly charts, the picture changed dramatically within 24 hours.

Top left is Regional Banks KRE. KRE led us down in October, thus we suspected it could easily do so again. KRE fell below the 200-WMA (green line). I like to give these phase changes a second week, so watch 50.90.

Retail XRT, has seen her share of the moody little goth sister.  This close under 200-WMA, will bring the 80-monthly MA in focus or 43.00.

Transportation IYT fell well back into an unconfirmed bearish phase on the Daily charts. That puts 175.50 in focus or the low from the late October, early November sell off.

Bottom left is the Russell 2000. Now in an unconfirmed bearish phase on the Daily charts, unless it can clear back over 151.60 area, more weakness is expected.

Biotechnology IBB, not surprisingly, failed its 50-WMA (blue line).  The public bought at the top and now scrambled to get out.

Lastly, Sister Semiconductors, just like what happened before each sell off in March 2018, June 2018, and September 2019, made a new swing high this month, and then fell hard Friday. That left what could be a strong topping pattern.  100.75 is where the 50-WMA sits for the real test.

Wonder Woman or Mistress of Gloom?

For now, regardless of which way the inside day resolves, SMH has proven worthy of her standing as the Moody Little Sister.

S&P 500 (SPY) Thursday a new swing high. Friday, a failure of Thursday’s low and a topping pattern on high volume in place. Measured move is to 257 area.

Russell 2000 (IWM) 151.60 now resistance with support at 148.20, then 145.

Dow (DIA) 253 is the rising 50 DMA to hold

Nasdaq (QQQ) Could not hold 181 on a closing basis so looks like a reversal top.  Measured move to 164.

KRE (Regional Banks) Ugly action and a major failure of the 200-WMA.

SMH (Semiconductors) Inside day which makes 106.63 an important level to hold or not

IYT (Transportation) Unconfirmed bearish phase with some support at 180.45 but bigger resistance at 183.70

IBB (Biotechnology) Unconfirmed bearish phase 110.25 resistance and next support at 106.80

XRT (Retail) You know what’s scary? This is not even oversold. Some support at 42.95, but if fails there, we are reversing a 10-year uptrend

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