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Monday, April 17, 2017

Semiconductor Stocks May Consolidate For A While

In the past 2 weeks, the Philadelphia Semiconductor Index (SOX) had been sliding. Last Wednesday, it broke below its 50-day SMA line at 985, and it closed at 960 - a level well below its intermediate uptrend line at 975 - on last Friday. 

In addition, we can also see that MACD was nearly below the zero line and the RSI has broken its uptrend line support. These plus the breakdown of the uptrend line and the 50-day SMA line could signal a temporary top for SOX. 


Chart 1: Philadelphia Semiconductor Index (SOX)'s daily chart as at April 14, 2017 (Source: Stockcharts.com)

If we look at the weekly chart, we will see MACD has hooked down and -DMI has crossed above +DMI. This negative signal may lead to a prolonged period of consolidation similar to that experienced in August 2015 to February 2016 (denoted as “B” on the SOX weekly chart) or a brief but sharp correction as witnessed by the market in September 2014 (denoted as “A” on the SOX weekly chart).


Chart 2: Philadelphia Semiconductor Index (SOX)'s weekly chart as at April 14, 2017 (Source: Stockcharts.com)

Looking at our the weekly charts of MPI & Unisem, we can see similar consolidation or correction (denoted as “A” and "B" respectively). Undoubtedly the share prices of both MPI & Unisem are off their recent high today. If you expect SOX to correct or consolidate in the next few days or weeks, you should take precaution by avoiding MPI or Unisem. As at 3:55 pm, MPI & Unisem were trading at RM10.96 & RM3.01 respectively.


Chart 3: MPI's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)


Chart 4: Unisem's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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