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After a bear market decline of almost -50%, the Semiconductor ETF (SMH) has rallied over +60% out of the October low. The long-term image nonetheless appears promising with the weekly PMO rising steeply above the zero line. However let’s look in a shorter-term time-frame to see if there any extra rapid issues.
This one-year day by day chart helps us look extra carefully on the present technical situations.
(1) To start, value is hitting the highest of a bearish rising wedge sample.
(2) The rising pattern traces from the October low have change into extra accelerated, making the advance parabolic and topic to a pointy correction.
(3) The PMO and OBV have bearish destructive divergences — they’re falling whereas value is making new 50-week highs.
(4) The Silver Cross Index exhibits that 84% of part SMH shares have the 20EMA above the 50EMA, which may be very bullish.
(5) The Golden Cross Index exhibits that 80% of SMH part shares have the 50EMA above the 200EMA, once more, very bullish.
(6) The P.c of Shares Above the 20EMA and 50EMA is at 100%. That is nearly as good because it will get, and presents vulnerability to a pullback.
Conclusion: SMH has a parabolic advance, in addition to some destructive divergences. Participation is superb, however it’s nearly as good because it will get, which usually leads to participation abating considerably. For my part, SMH is establishing for a correction, however this doesn’t rule out a remaining upside blow-off to cap the parabolic transfer. Now shouldn’t be a very good time to open new positions, relatively it’s a good time to tighten stops.
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Technical Evaluation is a windsock, not a crystal ball. –Carl Swenlin
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Value Momentum Oscillator (PMO)
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Carl Swenlin is a veteran technical analyst who has been actively engaged in market evaluation since 1981. A pioneer within the creation of on-line technical assets, he was president and founding father of DecisionPoint.com, one of many premier market timing and technical evaluation web sites on the net. DecisionPoint makes a speciality of inventory market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and weblog contributor.
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