Chart Advisor: Semiconductors Hit a New High

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

1/ Semiconductors Hit a New High

2/ Value-Oriented Sectors Are Making Moves

3/ Global Equities Remain Strong

4/ OJ Makes a Break for It

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ Semiconductors Hit a New High

Semiconductors embark on a fresh leg higher.

The Semiconductors ETF (SMH) recently completed a year-long consolidation, resolving to new all time highs:

It doesn’t get much more bullish than fresh all-time highs. And these fresh highs for SMH come at a critical inflection point for the tech sector.

Many individual tech names, such as Microsoft (MSFT), are reaching logical levels of overhead supply or even all-time highs. Also, the Technology Sector ETF (XLK) is revisiting its dotcom bubble highs vs. the broader market.

As supply looms overhead, SMH has a message for this year’s market leaders—no worry, beef curry!

2/ Value-Oriented Sectors Are Making Moves

The Fed has spoken, and the markets have reacted.

Stocks appear well adjusted to the new rising-rate regime as value-oriented sectors catch higher along with growth. 

Check out the Equities for Rising Rates ETF (EQRR):

EQRR is composed of about 30% energy, 25% financials, 19% materials, and 16% industrials, plus some other stuff. 

Energy, financials, materials, and industrials tend to deliver outsized returns as rates rise. And given the current conditions, it’s unsurprising that EQRR is on the verge of breaking out.

Rather than directly trading EQRR, investors could look for successful strategies by drilling down to individual names and industry groups with the goal of riding the strongest stocks to new highs.

The goal is always to buy the strongest and sell the weakest. Right now, we’re tracking cyclical value-oriented sectors for signs of leadership.

3/ Global Equities Remain Strong

International equities continue to print fresh highs, completing one accumulation pattern after another.

Earlier this year, the MSCI Japan ETF (EWJ) completed a year-long reversal formation. However, price is now challenging a new potential resistance level.

The 61.8% retracement of the 2022 bear cycle marks a logical area of overhead supply. But notice that the 200-day moving average is sloping higher in favor of the bulls.

If buyers force a decisive breakout above this supply zone, it would represent a significant feather in the hat for equities overseas. It would also support the uptrend underway stateside.

4/ OJ Makes a Break for It

If you hear someone claim that commodities are not in a bull market or that the commodity supercycle is dead, turn and run the other way.

Orange juice futures hit new all-time highs this week!

Cocoa futures continue to march toward our upside objective. Energy contracts are perking up after a quiet first half. And gold—gold could drive those Doubting Thomases bonkers if it breaks to new all-time highs.

Inflation isn’t going anywhere anytime soon, and neither are commodities.

But we don’t have to trade futures to take advantage of these trends. Plenty of opportunities should present themselves along the way via the equity markets. 

Originally posted 28th July 2023

Join the Discussion

Thank you for engaging with IBKR Campus. If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Your email address will not be published. Required fields are marked *

Disclosure: Investopedia

Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy.  While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Investopedia and is being posted with its permission. The views expressed in this material are solely those of the author and/or Investopedia and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: ETFs

Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.