SOX Top-Test Status and Thoughts on the Semis

Well, you can’t get much closer than this as SOX pops above and then closes a hair below the previous high of 1464.61. Like it or not, Semi is a US market leader and it has been leading both SPX and NDX since October.

sox

I have been holding AMAT for a few weeks now strictly for its chart, which tried to shake me out last week. But I held it pending the moving averages, and it held up and popped again. Maybe it wants the gap around 47.

amat

I also have a new position in ASML as part of a global diversification theme (and the Semis are a global story). But as for AMAT, at the time of purchase it was being slagged by industry experts and the entire sector was not forecast to start cycling until 2020 by an analyst posting at SEMI…

Don’t Look at These Charts!

Based on 3/12 global growth data for semiconductors, SEMI equipment and the world PMI leading indicator, it appears that the second quarter will also see weak demand (Chart 6). By 3Q’19 a seasonal pickup should help but 2019 appears to be a year of retrenchment – before 5G and AI hopefully kick start 2020.

semi

The thing to think about is that as a cycle leader for the economy and stock market, how far ahead does the sector look? I remember in 2013 we picked up on the no longer available book-to-bill ratio for Semi Equipment in January of 2013, but it took until 2016 for many to widely acknowledge the economy. Also, I don’t want to be US-centric here. I think global out performance could be in play. Hence the likes of ASML. But AMAT and most of the good Semi companies are global players.

Or maybe the whole thing is a top-test hoax. But as noted in the page 1 intro to NFTRH 545 on Sunday “A fair amount of bullish charts out there folks”. As a bottom feeder, I see that as especially the case globally.

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