Semis are starting to feel some pressure. This chart of SMH shows the 50 day moving average battle, but also a diamond formation (lower lows/higher highs followed by higher lows/lower highs) which is normally bearish. Resistance is 34, 34.25 and 34.70. key support is 33.30. A close above 34.25 and more importantly 34.75 puts semis back in charge. This theory that we can sustain a prolonged rally without the semis, on the basis that business IT spending is in software, is somewhat dubious. It is irrelevant (was October relevant?) that we are going into November, in fact early November could be bearish. However, shorts should take note of the strong put support below us so the second half of November (going into option expiration) should be bullish. But for now, I would be patient if looking for a long entry. We could be in a short the rallies mode for a week or so. My advice is still to take this one on a day to day basis. Today's push into the close was welcome news for the bulls, but we have to see if there is some follow through now that we are done with the fund year-end shuffle.
This entry was posted
on Tuesday, October 31, 2006 at 11:07 PM.
