
Are Semiconductor Stocks Flying Warning Flags? Check These Charts
A sign of economic strength is demand for semiconductors -- every appliance and hand-held device we buy contains computer chips. The PHLX Semiconductor Index, known as the SOX, is the benchmark that tracks 30 semiconductor stocks. Today five important components are profiled: Broadcom (AVGO) - Get Report , Intel (INTC) - Get Report , Qualcomm (QCOM) - Get Report , Micron (MU) - Get Report and Skyworks (SWKS) - Get Report .
The SOX set a multiyear high of 751.21 on June 1, 2015, but that's not the whole long-term picture. In March 2000, at the height of the tech bubble, the SOX peaked at 1,362.10. The components may have changed, but the conclusion can be made that demand for semiconductor stocks peaked 15 years ago and has not been able to recover even 50% from the Y2K demand peak.
Here's the weekly chart for the SOX.
Courtesy of MetaStock Xenith
The weekly chart for the SOX shows the Fibonacci Retracement levels from the March 2000 high of 1,362.10 to the November 2008 low of 167.55. Note that the first wave on a SOX rebound failed at its 23.6% retracement of 449.26 between the week of Jan. 17, 2001, and the week of May 3, 2013. During this time frame the 200-week simple moving average provided a long-term buying opportunity between the week of Aug. 5, 2011, and the week of Nov. 16, 2012, as this moving average rose from 343.86 to 360.63.
Once the SOX moved above the 23.6% retracement at 449.26, the next upside target was the 38.2% retracement level of 623.77, which became a magnet between the week of June 22, 2014, and the week of May 6, 2016. The in-between high of 751.21 was set on June 1, 2015, below the 50% retracement of 764.80.
Here's today's scorecard for the SOX and the components charted today.
Here's the weekly chart for Broadcom.
Courtesy of MetaStock Xenith
The weekly chart for Broadcom is neutral, with the stock above its key weekly moving average of $153.76 and above its 200-week simple moving average of $83.55. The weekly momentum reading is projected to decline to 70.45 this week, down from 71.44 on June 17.
Investors looking to buy Broadcom should consider doing so on weakness to 144.64, which is a key level on technical charts until the end of June. The downside risk is to $122.44 for the remainder of 2016.
Investors looking to reduce holdings should do so by selling strength to $158.41, which is a key levels on technical charts until the end of June.
Here's the weekly chart for Intel.
Courtesy of MetaStock Xenith
The weekly chart for Intel is positive, with the stock above its key weekly moving average of $31.52, and well above the 200-week simple moving average of $28.21, last tested at $27.76 during the week of Feb. 12. The weekly momentum reading is projected to rise to 66.76 this week, up from 59.87 on June 17.
Investors looking to buy Intel should consider doing so on weakness to $28.36 and $24.92, which are key levels on technical charts until the end of June and the end of 2016, respectively.
Investors looking to reduce holdings should do so by selling strength to $34.19, which is a key level on technical charts until the end of June.
Here's the weekly chart for Qualcomm.
Courtesy of MetaStock Xenith
The weekly chart for Qualcomm is neutral, with the stock above its key weekly moving average of $53.32 and well below its 200-week simple moving average of $65.50. The stock has been below its 200-week SMA since the week of July 3, 2015, when the average was $66.73. The weekly momentum reading is projected to decline to 69.89 this week, down from 73.95 on June 17.
Investors looking to buy Qualcomm should consider doing so on weakness to $49.79 and $46.98, which are key levels on technical charts until the end of June.
Investors looking to reduce holdings should do so by selling strength to $59.88, which is a key levels on technical charts until the end of June.
Here's the weekly chart for Micron.
Courtesy of MetaStock Xenith
The weekly chart for Micron is positive, with the stock above its key weekly moving average of $11.84, and well below its 200-week simple moving average of $18.91. The stock has been well below its 200-week SMA since the week of Oct. 23, 2015, when the average was $17.96. The weekly momentum reading is projected to rise to 71.14, up from 67.63 on June 17.
Investors looking to buy Micron should consider doing so on weakness to $12.19 and $10.57, which are key levels on technical charts until the end of this week and the end of June, respectively.
Investors looking to reduce holdings should do so by selling strength to $19.18, which is a key level on technical charts until the end of 2016.
Here's the weekly chart for Skyworks.
Courtesy of MetaStock Xenith
The weekly chart for Skyworks is negative, with the stock below its key weekly moving average of $66.25 and above its 200-week simple moving average of $52.84. The stock has been above its 200-week SMA since the week of July 19, 2013, when the average was $22.52. The weekly momentum reading is projected to decline to 29.49 this week, down from 31.57 on June 17.
Investors looking to buy Skyworks should consider doing so on weakness to $60.39, which is a key level on technical charts until the end of June.
Investors looking to reduce holdings should do so by selling strength to $67.01, which is a key level on technical charts until the end of 2016.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
















