I usually don’t like to do mid week analysis as one or two days does not make a market but yesterday was such a doozie here goes…
Dow down 831
QQQ down 7.90
Basically, everything was down except Smuckers Jam cause they got some good marmalade.
When I recommended on Monday morning to begin trimming I told you I hoped I was wrong. Unfortunately, it appears I was right.
This is what I wrote last weekend…
Semiconductors struggle to get through 2000 highs.
One closing week below support does not mean doom for semis and tech but it’s not good either. It is likely the beginning of a technical breakdown as you can see from some of the semiconductor index ETF components. This sector actually looked like it had a chance to break out to the upside a week ago.
What I think is happening with many of the semis is the struggle to get through the old 2000 highs. If we look at some of the component’s long term charts this is quite evident.
The only way I can see a possibility of resuming the uptrend any time soon is for SPY to close the week above SPY 281 (yellow upwards sloping trend line) and for technology stocks to find some support nearby.
S&P500 Index ETF (SPY) daily
Semis (SMH) got slammed down into support Wednesday so there is a chance this can hold. Also, it would be common to have a plus Dow 400 day following a down 800 day.
VanEck Vectors Semiconductor ETF (SMH) daily
If not, it is likely that weekly trimming will continue until the market presents better opportunities. This is the more likely outlook.
Feel free to continue trimming your sails. I generally don’t like buying or selling based on shorter time periods than weekly closes so no alerts quite yet but likely some sells going into next week.
Trade Smart,
Don