A Genius At The 50
The firm with the largest number of brokers, Merrill
Lynch, upgraded the semiconductor sector, sparking a broad surge in chip
stocks and a rally in technology shares.
A team of Merrill analysts said they “do not
expect semiconductor annual growth rates to continue to decline after August.”
The report suggested the semiconductor-ship would stop sinking, but was not
particularly upbeat about chips across the board.
But a look at the technical picture of the
semiconductor index
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be a genius at the 50-day moving average. The SOX had nudged higher for the
past three days in a technical pattern just below the 50-day MA that had
already set it up for a spring above the 50-line. Brokerages frequently make
recommendations around key technical indicators such as the 50- or the
200-day moving average. Their hope is to portray their research departments
as centers of excellence, as organizations that have re-invented the wheel.
The technicals, even the simple 50-day, spoke before the
announcement.
The chip index
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much as 7% on the session. Networkers
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technology
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The Nasdaq is up 50.00 at 1743.00, the S&P 500 is
up 9.00 at 1220.36, and the Dow is up 48 at 10,571.
Merrill heaped optimism on makers of wireless chips.
Merrill upgraded RF Micro Devices
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cellular phones, helping to send its stock up 13% on the session so far to
30.94.
Merrill also holds higher hopes for the semi equips:
Novellus
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all three of the aforementioned stocks recently broke above their 50-day
moving averages and pulled back to test them before trading higher today,
technical moves that Merrill was no doubt pleased to see prior to the
release of its sector upgrade.
Some optimism about the economy also comes from the
National Association of Purchasing Managers. Although the report indicated
that the US manufacturing economy has contracted for the past 12 months, the
inventory portion of the report shrank, suggesting the worst for America’s industrial
economy may be drawing to an end.