Member @natdicarlo had requested an update on the SMH / $SOXL short trade in the trading room, pointing out that the semiconductor stocks haven’t seemed to receive the memo yet that the leading stocks in the leading tech index (Nasdaq 100) continue to move sharply lower despite the broad market relatively holding up since the election. I just want to reiterate that the semis, despite the recent resiliency, still appear to be one of the most promising sectors on the short side at this time, with several of the individual semiconductor stocks that were recently highlighted as official & unofficial trade ideas now trading below key support levels &likely poised to move lower in the coming weeks & months.
SMH daily Nov 14th
SMH has been trading range-bound between the yellow lines since the breakdown below the rising wedge pattern. A break below the bottom of the range, 66.00, which comes in about 2.8% below current levels, will likely spark a relatively swift move down to any of all of the profit targets below. I’m also watching for the MACD signal-line (9-ema) to cross below the zero line following any break below the 66.00 level, which will help to signal a potential intermediate-term trend change from bullish to bearish. As such, a solid break below the 66.00 will provide the next objective entry or add-on to an SMH or SOXL short trade. The suggested stop remains any move above 70.50 at this time.