Three Reasons I Like The SMHs
The Semiconductor HOLDRs are facing what appears to be a crucial price resistance
zone (decision area) from 32-33. Why is this zone so important?
1) Symmetry — the previous two rallies were 5 and 4.5 points respectively.
This rally from the September 7 swing low is 4.4 points.
2) Fib Price Zone — SMH ran into a price resistance zone from 31.80-32.97.
This zone has confluence of 7 different Fibonacci price levels from previous
swing points.
3) Channel — SMH is smashing up against the top of a downtrending regression
channel. The trend would suggest, this is where this ETF runs out of gas.
I would love to be a bull, but I can’t force myself to put on the horns
right here. It will take SMH climbing and closing above this resistance zone
before I even consider the long side. Even then I’ll wait for a pullback
into a support zone before looking for a trigger. So, for now, keep the horns
hung up over the fireplace and snuggle into that warm bear rug, and just remember…closing
above 33 things will likely start heating up from a daily chart point of view.
Until next time!
Derrik
dhobbs@sym.com