Riding the SOX higher

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Chip stocks have had a great run to the upside lately. But has it been too much too fast? They say a picture can tell a thousand words, and the picture below, a chart of the Philadelphia Semiconductor Index over the last 17 years does just that. Take a look.

The first thing to notice is that the series of lower highs after the 2000 plunge, that ran from 2001 until 2013, was finally snapped in mid 2013 as it rode higher. It does not seem like much but consider that at reversal of a 13 year trend is a big deal. That move continued higher until finding a top in 2015 and pulling back. The pullback and subsequent reversal to the upside creates a target to 1000 on the Index, still 12% above current levels.

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The two triangles also trace out a Shark harmonic pattern. this pattern looks for a possible reversal, but not until the Index first reaches its potential Reversal Zone (PRZ) at 1185. Actually the Shark pattern comes with 2 PRZ’s and 1185 is the first. An extended Shark has a second PRZ at 1500. The momentum picture is strong as well. The RSI is in the bullish zone and moving up while the MACD is rising, positive and with lots of upside room. Even the Bollinger BandsĀ® are opening to the upside. This ride higher is not over!

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If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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