Demand for semiconductors is an important economic tell, as almost every appliance and handheld device contains computer chips. Weakness in semiconductor stocks has been providing economic warnings since the PHLX Semiconductor Index peaked on June 1, 2015.
Intel (INTC) , Qualcomm (QCOM) , Micron (MU) , Skyworks (SWKS) and Texas Instruments (TXN) are components of the semiconductor index, also known as the SOX. All but Texas Instruments are in bear market territory, and all five have already reported their quarterly earnings reports.
Here's a scorecard for the SOX and these five components.
The weekly charts are mixed. The red line through the weekly price bars is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average, considered the "reversion to the mean." The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicate overbought and readings below 20.00 indicate oversold. A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00.
Here's the weekly chart for Intel.
Courtesy of MetaStock Xenith
Intel had a close of $29.04 on Friday, down 15.7% year to date and in bear market territory. It is 23.4% below its multiyear high of $37.90, set on Dec. 5, 2014. The stock set its 2016 low of $28.52 on Feb. 3.
The weekly chart is negative, with the stock below its key weekly moving average of $31.38, but above its 200-week simple moving average of $27.76, which is considered the longer-term reversion to the mean. The weekly momentum reading ended last week at 26.92, down from 32.56 on Jan. 29.
Investors looking to buy Intel should place a good-till-canceled limit order to purchase the stock if it drops to $28.47 and $24.92, which are key levels on technical charts until the end of February and until the end of 2016, respectively.
Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $34.41, which is a key level on technical charts until the end of June.