Don't Ignore This Chart!

Semis are Back in Gear and this Stock is Poised to Extend Higher


The S&P 500 SPDR and Technology SPDR (XLK) hit new highs this month. Thus, the S&P 500 is signaling a bull market and the technology sector is leading. The Semiconductor SPDR (XSD), which is a broad-based semiconductor ETF, is also showing leadership as it challenges its April high. This tells semiconductor stocks have sector and industry group strength on their side.

Programming Note: Art's Charts is open to all - no membership required. Click here to read: Four Stocks Poised to Continue their Uptrends. 

The next chart shows NXP Semiconductor (NXPI) bouncing off a Reversal Alert Zone (RAZ) in May and breaking out of a small wedge this month. First, the stock surged from late December to late April and this looks like an impulse move. Second, the stock fell back to the 200-day SMA and hit the RAZ. This zone is marked by broken resistance turned support, support from the late March low and the 50-61.8% retracement zone. As its name suggests, a Reversal Alert Zone is an area to watch for a reversal and bounce.

NXPI bounced in June and then fell back in July with a small wedge, which represents a short-term correction. The stock then broke out of this small wedge with a surge on Monday. The bounce of the Reversal Alert Zone and small wedge breakout are bullish on the medium-term and short-term timeframes, respectively. This argues for higher prices in NXPI in the coming weeks/months. I would re-evaluate on a close below 90.

On Trend on YouTube (Tuesday, July 17th)

  • Small and Mid Caps Stall Out
  • Semiconductors: SOXX vs XSD
  • Focus on Homebuilders (ITB and 7 Stocks)
  • Stocks: Three Bullish Setups
  • Click here to Watch

Arthur Hill, CMT
Senior Technical Analyst,
Book: Define the Trend and Trade the Trend
Paper: RSI for Trend-Following and Momentum Strategies

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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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