NEW YORK (TheStreet) -- The PHLX Semiconductor Index is up 22% for the year to date, outperforming all five major equity averages. This is an important economic indicator as semiconductors are found in almost every product from major appliances and motor vehicles to the smallest electronic devices. Demand for chips equates to demand for the products that contain them.
The six stocks in the SOX profiled in this post have outperformed the index by considerable margins; Applied Materials (AMAT) up 29%, Avago Tech (AVGO) up 66%, Intel (INTC) up 35%, Lam Research (LRCX) up 32%, Micron Tech MU up 51% and Skyworks Solutions (SWKS) up 97%.
Before I profile for these six stocks let's look at the weekly chart for the SOX.
Courtesy of MetaStock Xenith
The weekly chart for the SOX (651.24) is positive with its five-week modified moving average at 632.71 and the 200-week simple moving average at 449.78.
The momentum run for the SOX began when the index popped above its 200-week SMA at 359.05 on November 23, 2012. Going back to before the "Crash of 2008" the SOX peaked early at 559.60 in June 2006 which was a sign of pending economic weakness. The cycle low was 167.55 set in November 2008 which was an early sign of pending economic strength. The multiyear intraday high for this cycle is 652.28 set on July 16 for a 289% gain from the low. The SOX is 17% above its January 2006 high which is downside risk of 14%. The risk to the November 2008 low is 74%.
The price pattern since July 4 is a potential double-top if the stocks profiled today fail to provide additional upward momentum.
Here are the profiles for the six semiconductor leaders and the "crunching the numbers" tables follow: Note that all six are above all five moving averages in the first table with rising or overbought 12x3x3 weekly slow stochastic readings.
Applied Materials ($22.76) set a multiyear intraday high at $23.46 on July 7 just above its August 2007 high at $23.00 but well below its April 2000 bubble high at $57.31. The weekly chart, like the chart for the SOX, shows a potential double-top. Weekly and semiannual value levels are $21.47 and $18.63, respectively, with a quarterly pivot at $22.07 and a monthly risky level at $23.40.
Avago Tech ($87.88) set an all-time intraday high at $88.05 on Friday but was not a publicly traded before the "Crash of 2008." The weekly chart shows this stock as one of the strongest momentum plays of 2014. Weekly and semiannual value levels are $81.16 and $66.66, respectively, with a monthly pivot at $85.09.
Intel ($35.00) set a multiyear intraday high at $35.20 on August 22 well above its December 2007 high at $27.99 but well below its September 2000 bubble high at $75.69. Monthly and semiannual value levels are $32.28 and $29.79, respectively, with a weekly risky level at $37.27.
LAM Research ($71.97) set a multiyear intraday high at $72.92 on July 31 well above its July 2007 high at $60.82 and well above its April 2000 bubble high at $55.75. Monthly and quarterly value levels are $69.09 and $61.01, respectively, with a weekly pivot at $69.92.
Micron Tech ($32.94) set a multiyear intraday high at $34.85 on July 16 well above its September 2006 high at $18.65, but well below its July 2000 bubble high at $97.19. Quarterly and semiannual value levels are $28.92 and $20.30, respectively, with a weekly pivot at $31.86 and a monthly risky level at $34.00.
Skyworks Solutions ($56.28) set a multiyear intraday high at $57.18 on Sept. 2 well above its June 17, 2008 high at $11.19 but well below its April 2000 bubble high above $70 a share. A semiannual value level is $40.85 with monthly and weekly risky levels at $60.00 and $60.86, respectively.
Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics
This table provides the technical status for the stocks profiled in today's report.
There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.
Interpretations: Stocks below a moving average are listed in red.
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon.
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon.
Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy & Where to Sell
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTEL CORP (INTC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results." You can view the full analysis from the report here: INTC Ratings Report