Wednesday, January 25, 2012

Semicon stocks poised for recovery

The Philadelphia Semiconductor Index (SOX) has broken above its intermediate downtrend line (see Chart 1 & 2 below). In addition, SOX has broken above the 200-day SMA line and a few of the indicators are turning upward. However, I believe SOX will not rally immediately as the ADX is still flat & will probably turn upward over the next 2-3 weeks. This will give us time to accumulate some semicon stocks.

Chart 1: SOX's weekly chart as at Jan 16, 2012 (Source: Stockcharts)

Chart 2: SOX's weekly chart as at Jan 16, 2012 (Source: Yahoo Finance)

The best play for this sector is the market leader, Unisem. The good entry to Unisem is at RM1.20. Gtronic & MPI would bring up the rear, with good entry at RM0.90 & RM3.00, respectively.

Chart 3: Unisem's weekly chart as at Jan 16, 2012 (Source: Tradesignum)

Chart 4: Gtronic's weekly chart as at Jan 16, 2012 (Source: Tradesignum)

Chart 5: MPI's weekly chart as at Jan 16, 2012 (Source: Tradesignum)


luckystock2 said...

Hi Alex,
I dun think we can still can get Unisem at 1.2 and mpi at 3.00 in short term. Have to buy at higher price if really intend to ride on the trend. However , Gtronic at 0.9 looks possible.
Tx for ur sharing.

desmond said...

Hi Alex,
Do you have any comment on dksh?It is an uptrend now?

Alex Lu said...

Hi desmond

DKSh has gone beyond my expectation. However, if it reaches RM2.35-2.40, I think it is a SELL.

Alex Lu said...

Hi luckystock2

The semicon stocks, especially MPI, have rallied again today. You are right... You can't get these stocks at the prices indicated. Is it wise to chase? I will leave that to the investors.

leslieroycarter said...

Hi Alex:
Do u still maintained your upside view on kseng given this stock is practically dormant since the disbursement of dividend 1 for 2 held?

alwayswin111 said...

Hi Alex
Your write ups are very good , but I notice that you like 'break-out ' counters.
I prefer counters at support. You are not obligated to do that for your readers, but it would be lovely if you could do more write ups on counters at support.
But then this is your blog -and you are already giving us brilliant material.
Just a suggestion . Thanks

Alex Lu said...

Hi leslieroycarter

Kseng has always been a quiet stock. Its immediate resistance from the intermediate downtrend line is at RM4.20 while the support from the long-term uptrend line is at RM3.80.

With the monthly MACD indicator hooked down and the 10-month SMA line nearly cutting below the 20-month SMA line, the technical outlook for the stock is mildly negative. You should avoid the stock unless you want to do a swing trade on a test of the long-term uptrend line at RM3.80. If you are having the stock, you should sell something if it rose to RM4.20.

Alex Lu said...

Hi alwayswin111

I do post on stocks that test the support level. However, you must note two things:
1. for every stock that has a breakout, there are 3-5 stocks that are resting on the support.
2. a stock can hang around the support for a while.

In the end, you have to live with the maxim: Nothing succeeds quite as well as success. Nothing recedes as fast as success.

Finally, you should also note that not all breakout will lead to a rally. Some breakouts are bull traps.

Good luck in your trading!

alwayswin111 said...

Hi Alex
Thanks for reply.