The Chips Are Down
Semiconductor stocks have slid this month, but some traders may be looking for a bounce.
The first pattern on today’s chart of the Philadelphia Semiconductor index is the 2892 level. It was the close on February 22 that was tested and held twice in March. SOX briefly fell below it yesterday morning but rallied back to close above it. The result was a false breakdown and a hammer candlestick -- both of which can signal reversals.
(The horizontal line is also near the December 13 high, which may suggest old resistance has become new support.)
Next, the index has remained around the same area after falling sharply on Tuesday. Investors following the “three-day rule” of waiting after a drop could now feel more comfortable nibbling.
Third, Thursday’s bounce occurred at the 100-day simple moving average (SMA). That SMA could be important because it’s mostly tracked the longer-term trend since early 2022.
Fourth, stochastics are trying to rebound from an oversold condition.
Finally, the news flow may favor chips. Intel beat earnings estimates last night, and coming weeks will feature other names like Advanced Micro Devices (May 2) and Nvidia (May 24).
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Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart of the Philadelphia Semiconductor index is the 2892 level. It was the close on February 22 that was tested and held twice in March. SOX briefly fell below it yesterday morning but rallied back to close above it. The result was a false breakdown and a hammer candlestick -- both of which can signal reversals.
(The horizontal line is also near the December 13 high, which may suggest old resistance has become new support.)
Next, the index has remained around the same area after falling sharply on Tuesday. Investors following the “three-day rule” of waiting after a drop could now feel more comfortable nibbling.
Third, Thursday’s bounce occurred at the 100-day simple moving average (SMA). That SMA could be important because it’s mostly tracked the longer-term trend since early 2022.
Fourth, stochastics are trying to rebound from an oversold condition.
Finally, the news flow may favor chips. Intel beat earnings estimates last night, and coming weeks will feature other names like Advanced Micro Devices (May 2) and Nvidia (May 24).
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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