Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Semiconductor Index Offers Shorting Opportunity At 50DMA

Published 12/11/2017, 12:22 AM
Updated 07/09/2023, 06:31 AM

While most indices were able to post small gains last week, it was left to the Semiconductor Index to post a small loss; leaving a bearish engulfing pattern at its 50-day MA and an ideal opportunity for shorts to take advantage of the new (intermediate) downward trend. In such a scenario look for stops above the 50-day MA.

The flip side, if there is an early push above the 50-day MA, then these same short-stops are likely to trigger an acceleration in the rally and bring fresh buyers in a new long trade; a long trade working off oversold conditions.

SOX Daily Chart


Not much of interest from other indices. The S&P rallied in modest fashion which gives existing longs more leeway should bears make a return.

SPX Daily Chart


The NASDAQ closed with a 'black candlestick'. This is typically bearish and given its proximity to the recent all-time high is in itself a shorting opportunity. Unlike the Semiconductor Index there isn't the same lead-in bearishness or 50-day MA to lean on but with a stop on a break above Friday's highs it's a doable shorting opportunity.

COMPQ Daily Chart


Finally, the Russell 2000 pushed back into last week's 'bull trap' but there is still plenty of work to do before longs can negate it. However, shorts don't have a clear play as the risk:reward isn't great given the spike high would have to be factored in. The net result is probably another small gain. Note the MACD is still on a 'sell' trigger along with a bearish -DI/+DI.

RUT Daily Chart


For Monday, a flat open or gap higher which fails to gain momentum after the first half-hour will offer itself as a good shorting opportunity for both Semiconductor Index and Nasdaq. If markets can hold gains after the opening half-hour then a string of short covering moves is likely for the Semiconductor Index and the Russell 2000 is probably another edging in favour of bulls.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.