Is This A Good Time For Semiconductor Stocks?

The semiconductor ETF SMH caught my attention. While the ETFs of other sectors are showing some, albeit minor, recent strength, SMH has fallen below its 200-day moving average on several high volume down-close days.

Checking the seasonal pattern for SMH I discovered the ETF has averaged a 3.9% drop over the next 4 weeks, and a 7.1% drop over the next 14 weeks.

Looking at the 14-week period and the years where there were gains, the gains were typically lower than many of the losing years.

I investigated the top 10 holdings of SMH, looking at two indicators of accumulation and distribution. The results show weakness or outright distribution in all of them:

The conclusion is this may not be a good time to enter new semiconductor trades. Going back to the seasonal chart, the peak average decline, at 14 weeks, comes out this year to the third week of October.  If you are looking to increase the odds of success on every trade you make, semi stocks are not the sector to look in for the near future, at least until the end of October.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

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