It used to be everyone loved the semiconductor stocks.

If you thought the market was going to rally, you looked to buy a semi. But you can see from the performance of the SOXX, the Semiconductor Index, why no one looks to the semis anymore. Their performance has been rather punk in the past year or two.

However, the mere fact that no one pays attention to them anymore is something that piques my curiosity. Then I look at the chart of the index and see a bottom in the making.

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Now I grant you that this bottom is very small and of course fragile, based on its short length (in terms of time) but note how it crossed that small downtrend line (red line) and spurted right to resistance. I expect that spike high in February around 380 will be difficult to get through the first time up but let's look at the measurement of the base.

When measuring a base we take the high of the pattern and subtract the low of the pattern. In this case it is (approximately) 375-330=45. We then take that net differential and add it on to the breakout. We can add it on to the point where we crossed the red downtrend line (355) and then we'd get a target of 400. If we add it on to the next breakout (around 375-380) we get a target near 420.

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Now note that the big, longer-term downtrend line comes in around 420. Also the next major point of resistance is in the 405-420 area, so we have three reasons to believe a target price in the 405-420 area is doable: a big downtrend line comes in there, the base measures there, and there is resistance there.

One of the easiest ways to play the semis is to use the

Semiconductor HOLDRs

(SMH) - Get Report

ETF. The stocks that make up the SMH are different than the stocks that make up the SOXX (their weightings are different) so the chart is not exactly the same. The SMH is dominated by

Intel

(INTC) - Get Report

,

Texas Instruments

(TXN) - Get Report

and

Applied Materials

(AMAT) - Get Report

, and we can see that the SMH crossed a downtrend line already. That's the good news. The bad news is that it is much closer to resistance than the SOX itself.

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However, I'd expect the SMH to eventually work its way back up to the $32-$34 area where its resistance is formidable. As long as that red uptrend line is not broken the chart should move higher.

This article was written by Helene Meisler, whose newsletter, "TheStreet.com Top Stocks," gives readers daily investing ideas based on a study of technical analysis.

At the time of publication, Meisler had no positions in stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information,

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. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback;

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