Don't Ignore This Chart!

Semis Send a Message to the Market


Chips are leading the market again as the broad-based Semiconductor SPDR (XSD) broke out of a triangle consolidation and hit a new high. A new high in this cyclical group is positive for the technology sector, the Nasdaq and the broader market.

First note that XSD has 34 components and they are relatively equally weighted. AMD, which as a market cap of $24 billion, is the largest holding (5.23%) and Intel (2.77%), market cap $224 billion, is not even in the top ten. The Semiconductor iShares (SOXX), in contrast, is weighted towards large-caps with the top ten stocks accounting for 59% of the ETF. XSD reflects performance for the "average" chip stock.  

On the price chart, XSD has been in a choppy uptrend since November with a series of higher highs throughout 2018. After a 17% surge in May-June, the ETF consolidated with a triangle and then broke out with a surge the last seven days.

Chartists can use the Measured Move technique to guesstimate an upside target by projecting another 17% move from the triangle low, which is around 84. A 17% advance from this low would target a move to the 84 area. Keep in mind that this is a loose price target and chartists should re-evaluation as new price bars materialize.

On Trend on Youtube

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Topics for Tuesday, August 28th:

  • Industrials Extend as Materials Surge (ITA, DWDP)
  • Finance and Brokers Pop, but Regionals Flatline
  • Focus on Finance (GS, JPM, MS, BAC, C, SCHW)
  • Biotech ETFs Surge (XLV, IHI, IHF hit new highs)
  • Ask Arthur: GoldenX, Market Timing, Bond/$ Correlation, Scan Code
  • Stocks/ETFs to Watch: ITB, PX, TMUS, MRO, NOV, ICE

Plan Your Trade and Trade Your Plan.

- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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