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A
QUICK LOOK AT THE SEMI'S
by Gary
Tanashian
biiwii.com
February 13, 2007
I
would not be buying this chart. Would you? The SOX had its last glory
day (in the current bull market in inflation) a year ago with a double
top. Bulls are spinning all kinds of tales about why everything is
coming up rosy in 2007. Liquidity running amok (one Yen carry away from
a train wreck), 3rd year of presidential cycle (well, the 2nd year
didn't work so well in reverse so who's to say the 3rd year will hold to
convention?) and the Dow theory Tranny confirmation (Steve Saville makes
a good point that the inflation bull began
with a Dow theory bearish
confirmation so why not have it end with a bullish one?).
If the SOX fails support @ 450, then the next noted range comes into
play quickly. If that fails, a lot of "buy the dippers" are
going to get blown up. The market needs a correction at the least. For
clues as to whether or not something more serious is in the offing, it
is a good idea to keep a close eye on a leading index like the SOX. The
market may indeed eventually head higher in 2007, fueled by liquidity
gone wild, presidential hype and bullish euphoria, but the SOX is
hinting of a break down at the moment. If it becomes a full fledged
rout, we will have a strong bearish signal for the market in the near to
intermediate term at least.
Relevant ETF's for trading the semiconductor sector include SMH &
XSD. We have no position in the sector, long or
short.
© 2007 Gary Tanashian
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