How to Trade Intel, Micron, Five Other Semiconductor Stocks

NEW YORK (TheStreet) -- Volatility among the 30 components of the PHLX Semiconductor Index, also known as the SOX, creates investment opportunities in the stocks that are outperforming the index.

The biggest year-to-date winners are Avago Technologies  (AVGO) - Get Report and Skyworks Solutions (SWKS) - Get Report. Those stocks were also the largest gainers of 2014 as the two companies benefited from supplying computer chips for Apple (AAPL) - Get Report products. Entering the list of year-to-date winners are Marvel Technology (MRVL) - Get Report, Nvidia (NVDA) - Get Report and Texas Instruments (TXN) - Get Report. This post will look at those five stocks, plus Intel (INTC) - Get Report and Micron Technology (MU) - Get Report, which are two widely held semiconductor stocks.

Let's take a look at the daily and weekly charts for the SOX first.

Here's the daily chart for the SOX.

Courtesy of MetaStock Xenith

The semiconductor index (701.30) has been tracking above its 200-day simple moving average (green line) for the last 24 months, interrupted by a correction between Oct.10 and Oct. 21. The index set a multiyear intraday high of $734.53 on March 2. The SOX is up 2.1% year to date and is above its 50-day (blue line) and 200-day simple moving averages of 687.97 and 648.54, respectively.

Here's the weekly chart for the SOX.

Courtesy of MetaStock Xenith

The weekly chart for the SOX is positive but overbought with the index above its key weekly moving average (red line at the upper right) at 696.19. Weekly momentum as shown on the red line at the bottom of the graph is at 80.90 above the overbought threshold of 80.00.

By technical definition, the weekly chart will shift to negative given a weekly close below its key weekly moving average with momentum declining below 80.00.

Avago ($125.12) has gained 24% so far in 2015, and is well above its 50-day and 200-day simple moving averages of $109.27 and $88.14, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $115.67.

Investors looking to buy Avago should place a good 'til canceled limit order to purchase the stock if it drops to $100.33, which is a key level on technical charts until the end of March.

Investors looking to reduce holdings should place a sell-stop order below the key weekly moving average at $115.67. Note that this average will be rising each week.

Intel ($31.70) was the best performing component of the Dow Jones Industrial Average in 2014 with a gain of 40%. The stock is down 13% so far in 2015, and is now below its 50-day and 200-day simple moving averages of $34.82 and $33.68, respectively. The weekly chart is negative with the stock below its key weekly moving average of $33.77.

Investors looking to buy Intel should place a good till canceled limit order to purchase the stock if it drops to $30.01, which is a key level on technical charts for all of 2015.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $33.94, which is a key level on technical charts until the end of June.

Marvel Tech ($16.32) has gained 13% so far in 2015, and is above its 50-day and 200-day simple moving averages of $15.77 and $14.36, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $16.

Investors looking to buy Marvel should place a good till canceled limit order to purchase the stock if it drops to $14.72, which is a key level on technical charts until the end of March.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $19.57, which is a key level on technical charts until the end of March.

Micron ($27.61) is down 21% so far in 2015, and is below its 50-day and simple moving averages of $30.98 and $31.95, respectively. At the end of February, the 50-day SMA declined below the 200-day SMA in what technicians call a "Death Cross." The weekly chart is negative with the stock below its key weekly moving average of $30.18.

Investors looking to buy Micron should place a good till canceled limit order to purchase the stock if it drops to $22.28, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $28.75, which is a key level on technical charts until the end of June.

Nvidia ($22.99) has gained 15% so far in 2015, and is above its 50-day and 200-day simple moving averages of $20.88 and $19.54, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $21.72.

Investors looking to buy Nvidia should place a good till canceled limit order to purchase the stock if it drops to $16.73, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a sell-stop order below the key weekly moving average of $21.72. Note that this average will be rising each week.

Skyworks Solutions ($91.20) has gained 25% so far in 2015, and is well above its 50-day and 200-day simple moving averages of $80.78 and $61.62, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $84.23.

Investors looking to buy Skyworks should place a good till canceled limit order to purchase the stock if it drops to $65.31, which is a key level on technical charts until the end of March.

Investors looking to reduce holdings should place a sell-stop order below the key weekly moving average of $84.23. Note that this average will be rising each week.

Texas Instruments ($57.10) has gained of 6.8% so far in 2015, and is above its 50-day and 200-day simple moving averages of $55.56 and $50.52, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $56.49.

Investors looking to buy Texas Instruments should place a good till canceled limit order to purchase the stock if it drops to $46.39, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $58.91, which is a key level on technical charts until the end of March.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.