Stocks in SOX: Sector Rotation Shifts to Chips

NEW YORK ( TheStreet) -- In recent stories I have written on TheStreet.com, I suggested booking profits on overvalued utility stocks on July 30 and on overvalued consumer staples stocks Monday, Aug. 6. On the buy side I focused on the undervalued basic materials stocks on July 31 and undervalued energy stocks on Aug. 1.

Today I am focusing on undervalued and Buy rated stocks in the PHLX Semiconductor Sector Index ( SOXX). The last time I assessed the risk/reward for semiconductors was on July 19 when I wrote Intel Pointing the Way for Chip Stocks two days after Intel ( INTC) reported solid second-quarter earnings results.

On July 17, SOX set its year to date low at 345.50. Since then SOX rallied to 394.13, up 14.1% into Monday, Aug. 6. The daily chart below shows that SOX failed at its 200-day simple moving average on June 20 and on July 3; it appears that the third time is the charm with Monday's close above the 200-day at 391.78. It was the first close above the 200-day since May 14.

At the low on July 17, SOX held above its 200-week simple moving average 344.60.


Chart Courtesy of Thomson / Reuters

The weekly chart below shows that the SOX held just above its 200-week simple moving average the weekly of July 20. The weekly chart profile turned positive a week later on July 27 with rising momentum (12x3x3 weekly slow stochastic) reading and with a weekly close above the five-week modified moving average, now at 381.53.

My weekly value level is 383.21 with monthly and quarterly risky levels at 420.20 and 450.28.

Chart Courtesy of Thomson/Reuters

The above table shows data from www.ValuEngine.com covering 25 of the 26 components of the SOX listed alphabetically from top to bottom. Click on it to see a larger pop-up version of the table.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A 1-Engine rating is a Strong Sell, a 2-Engine rating is a Sell, a 3-Engine rating is a Hold, a 4-Engine rating is a Buy and a 5-Engine rating is a Strong Buy.

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