The recent carnage in the Semiconductor Index (SOX) moved to the forefront on Friday with INTC's poor guidance moving forward. Thus, we must look at the SOX within the context of its relationship with the S&P 500 (SPX), and for this we use the ratio of the two Quite simply, we could very well see s a short-term bottom in the ratio in the days or weeks ahead – but it certainly isn't within a historical context "the bottom" we would feel comfortable buying into on a longer-term basis. Our momentum indicators are now oversold, but it has paid to wait until a "positive divergence' forms prior to becoming aggressively long this sector...which will require many months.

Bottom Line: We don't expect the semiconductors to be "the leaders: on rallies as they once were.

Chip Anderson
About the author: is the founder and president of He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at, and provides updates about new features or additions to the site. Learn More
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