Semiconductors: Historic Breakout or Double Top?
Chris Kimble | Jul 21, 2023 02:51AM ET
Over the years, we have consistently pointed out the importance of stock market leadership.
The premise is simple. If a sector is out-performing, find strong stocks within that sector. If we are in a bull market, follow out-performing sectors (leaders) for clues about the stock market’s health.
One such sector is Semiconductors. Below is a “monthly” chart of the VanEck Semiconductor ETF (NASDAQ:SMH).
At first glance, we can see how the turn lower into 2022 led the market lower and how the turn higher into 2023 has led the market higher.
Note that the long-term trend is still higher as the blue trend line support at (1) held firm. Equally important, $SMH put in a bullish reversal off of that support which led the Semiconductors (and the market) higher.
Currently, $SMH is testing its prior highs at (2).
“Breakout or Double Top?” ‘Holy cow,’ it sure looks important what this market leader does next.
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