Semiconductor names are breaking out to new highs across the board. The Semis ETF $SMH, as well as Advanced Micro Devices, $AMD, Applied Materials, $AMAT, Micron Technologies, $MU and Nvidia, $NVDA, are large cap leaders that have all made new all-time highs or 52-week highs over the last week.
This is considered a bullish technical signal for the overall stock market and the economy, because semiconductors are an economically sensitive commodity, and a key gauge of future economic activity. When companies are optimistic about future business conditions, they invest in new products and manufacturing, and semiconductors are a key component. When companies get hesitant about future business conditions, they cut back on expenses and production.
Applied Materials, $AMAT, reported earnings that came in above expectations after the close on Wednesday. The $AMAT report and guidance are read by the market as a key tell, because $AMAT sells the manufacturing equipment to the other Semis companies that they use for production. While $INTC, $AMD and $MU might battle it out for the same customer base, whoever gets the deal, there is a good chance that $AMAT will supply them with the equipment.
My trading process is to follow the intermediate to longer term trend, and the trend continues to be very strong in the semiconductor space here, with leading names and ETFs at new highs, in uptrends above all key moving averages, all bullish technical sigals. As long as these trends continue higher, I will maintain my bullish technical view on the group. Following are leading names that I monitor, in the space.
At current levels, some names below are extended and some are set up better on their charts.
Semis and Tech both continue to be ‘buy the pullbacks’ names, which we did in this recent minor January pullback.
$SMH
$AMAT
$AMD
$MU
$NVDA
DISCLOSURE: At the time of this blog, I am currently long $AMD and $NVDA.
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