Semi Bullish

On July 18th we had an NFTRH update (still pw protected) discussing the Semiconductor sector and secondarily, its implications for the gold sector. Those implications have to remain private for now because they are forward-looking and that is what the premium service does, among other things; it looks forward and creates rational pathways out ahead even as we manage the present in ways it needs to be managed.

But here’s the first part of the update.

We are now into H2 2019. It’s amazing how time flies. The Semi industry has been targeting H2 2019 for a bottom and/or upturn, and here we are. For reference, linked here is Walt Custer, an industry analyst posted at SEMI projecting that “key global electronic industry monthly time series appear to have reached their 3/12 bottoms and now have begun to improve”.

As World Cycles Turn

His article contains several industry cycle charts you might want to check out.

As for our charts, they are mixed but the Semi index is conspicuously positive as the broad stock market pulls back this week. Three Semi equipment companies are shown in ratio to the broad SOX. Of those, AMAT continues to look constructive in relative (to the SOX) bottom-making and ASML/SOX may have bottomed in the spring. LRCX/SOX has been grinding an uninspiring uptrend since Q4 2018. I see the equipment stocks vs. the broad sector as a leading indicator. The lower panel updates SOX/NDX, which is a key market leader we keep an eye on. It’s still in recovery mode, although it remains questionable.

The update used this chart to make some points about cycle and market leadership.

sox

Also noted…

If the Semi cycle is bottoming it would be a positive, although early signal for the US and global economy. Note the word “if”, because industry analysts are currently projecting ahead, not extrapolating already positive data. I am still holding a couple Semi stocks (NVDA, XLNX & oddball SIMO) as something of a test case as long as their charts keep me aboard.

Sure, it could all just be a scam; bulls running mindlessly. It could also be the first inkling of something out there in 2020. Semi is a leader after all. Minds open is all.

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