Cubes Half Way Home
Tech funds led
strongly Monday, propelled by strong performances in such
stalwarts as Hewlett-Packard, Intel, and Cisco Systems.
Overseas, Japan WEBS shares racked up smart gains.
The Semiconductor
HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating), which began trading May 5 on the American
Stock Exchange, ran up 6.8% to a new high of 102 1/2,
clearing a 2 1/2-week trading range. It was the day’s
biggest gain among the exchange-traded funds. The
Semiconductor HOLDR notched a bullish close at the top of
the day’s trading range on a volume pickup. All charts in
this column are plotted on a logarithmic price scale.
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Behind the fund
was strong technical action in such chipmakers as Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
and Rambus
(
RMBS |
Quote |
Chart |
News |
PowerRating). Intel climbed 10 7/16 to 136 1/2,
breaking out of a cup-with-handle on strong volume. Rambus
jumped 7 7/8 to 91 1/4 on nine times its usual trade.
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The Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) rose 5.8%. The tradable fund has appreciated 53%
from its May 24 low of 113 1/4.
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In another
positive sign, the Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating)
cleared its mid-level of 96 3/8 on Monday. The Cubes rose
4.0% to 98 1/16.
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The mid-level, or
midpoint, represents the price at which a security has made
up half the point loss of a recent correction, as measured
from the pre-correction intraday high to the low of the
correction. You can find the mid-level by summing those two
values, then dividing the total by 2.
I tend to avoid
long plays in stocks that trade below their mid-levels or
their 50-day or 200-day moving averages, on the assumption
that they face heavy overhead supply. Overhead supply is the
amount of stock in the hands of people who bought at higher
levels. These so-called weak holders tend to sell
into rallies in order to exit their positions.
The bruised
Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) gained 2.6%, pulling back above its
50-day moving average.
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The Japan WEBS
series
(
EWJ |
Quote |
Chart |
News |
PowerRating) gained 3.1%. You can see the same story in
the yen, which rose broadly against the dollar and the euro
on hopes of a Japanese economic recovery.
Barclays Global
Fund Advisors operates 17 WEBS funds. Each one enables
market players to trade the index of a specific country.
Each WEBS series tracks the foreign equity securities index
compiled for that country by Morgan Stanley Capital
International. They are traded on the American Stock
Exchange. For more information on WEBS funds, check out my
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