Why You Should Watch The Semis

Well, everyone is saying the market rallied on Wednesday because of the
happenings in Iraq. I say maybe. More importantly, the market held at what I
would call important support. Let’s take a peek.

It’s all about the SEMIS. I think I have said this a thousand times in the past
few years. The SOX simply held right at the 50 day moving average.

If you did not know, the 50 day average is important because it is a place where
institutions tend to buy as a market pulls back in a good market. It is also a
place where institutions sell in a bad market as bounces occur into it.

So far…so good. It is now a very easy exercise to tell us the health of the
market. For sure, action has deteriorated as NEW HIGHS have contracted in a big
way…as more than a few leading names have broke down…and as major indices
put in near-term tops. But these pullbacks don’t have to be the end of the
rally. That’s why we pay attention to support levels.

So…mark these numbers down.

The SOX at…373

The S&P 500 at…974

If at any time the market breaks these levels on a closing basis, what has been
a controlled and rotational correction could start to turn a little more to the
nasty side.