NEW YORK (TheStreet) -- Semiconductor demand has been a positive factor in the 2014 economy recovery resulting in overbought technical momentum for seven members of the PHLX Semiconductor Index, known as the SOX. Strong demand for computer chips should translate into strong holiday sales for consumer products from appliances to handheld devices.
On Wednesday, a semiconductor industry confidence index edged up for its 2015 outlook, but given consistently lower revenue guidance for fourth quarter revenue survey participants reflected a cloud of uncertainty.
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The PHLX Semiconductor index was up 32% at its recent high set this week, but the SOX ended Wednesday at 679.97, up 27% year to date.
Given the strong momentum characteristics of the "stocks in the SOX" it's important to have investment strategies that focus on exit strategies to lock in gains. Here are the strategies for the seven that are leading the index. Keep in mind that the key weekly moving average will be rising each week.
Applied Materials (AMAT) ($23.78) declined 21% from $23.46 on July 7 to as low as $18.63 into Oct. 15 then rebounded 36% to a multiyear intraday high at $25.25 on Dec. 8. The stock was below its 200-day simple moving average between Oct. 10 and Oct. 21 with this average now at $21.25. The weekly chart is positive but overbought with its key weekly moving average at $23.10. Investors should consider a sell-stop below $23.10 to reduce holdings.
Avago Tech (AVGO) ($99.25) declined 24% from $90.88 on Sept. 19 to as low as $68.75 into Oct. 10 then rebounded 53% to an all-time intraday high at $105.00 on Dec. 5. The stock stayed above its 200-day simple moving average at the low on Oct. 10 with this average now at $74.97. The weekly chart is positive but overbought with its key weekly moving average at $91.89. Investors should consider a sell-stop below $91.89 to reduce holdings.
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