Don't Ignore This Chart!

Waiting On This Inverse Head & Shoulder Breakout

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Xilinx (XLNX) is a $13.5 billion semiconductor company and it nearly broke out of a very bullish inverse head & shoulders pattern on heavy volume today.  But it didn't.  Instead, it reversed lower along with most semiconductor stocks and tested its rising 20 day EMA.  The technical picture here still remains quite bullish as you can see from the chart below:

The biggest problem for XLNX right now isn't XLNX.  It's the weak relative performance of all technology stocks.  The Dow Jones U.S. Semiconductor Index ($DJUSSC) fell 4.5% on today's session.  Obviously, if its peer group continues to struggle, XLNX will have a much lesser opportunity to break out of this bullish pattern.  The 20 day EMA and 50 day SMA are two key moving averages that could mark a potential inverse right shoulder so look for reversing candles there.  Continuing high volume and a close beneath the 50 day SMA would likely lead to further selling and a possible rectangular consolidation.  That development could lead to a drop in XLNX down to the 49 level to test its October low.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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