Semiconductors Chip Away

August 3, 2017

Mish's Daily

By Mish Schneider


blankThe precocious youngest sibling, Sister Semiconductors (SMH) represents The U.S. Semiconductor industry.

This industry has been a major innovator among all U.S. industries.

The Semiconductor Industry is the newest industry among the Modern Family.

Economists estimate that all productivity growth during the current decade will be IT (Information Technology) based by both using and producing IT industries.

The basis of the very growth of humanity is IT. At its core is Semiconductors.

Per the analysis of data from the U.S. Bureau of Labor Statistics (BLS), the U.S. semiconductor industry now employs almost 250,000 workers directly and supports more than 1 million additional jobs throughout the broader U.S. economy.

These supported jobs do not even include the millions of downstream electronics jobs in the U.S. that semiconductors enable.

Sister Semiconductors sits at her computer pondering ways to improve all aspects of human life.

Her “pet” robot, named Chip, reminds us that automation, artificial intelligence and big data are now a part of our everyday existence.

With that said, will IT save the U.S. Economy and the Market?

Today, SMH went into an unconfirmed Warning Phase.

Unconfirmed because we look for a second close under the 50 daily moving average. This way, we do not get whipsawed into selling or buying for that matter.

The number of people employed in the Semiconductor field pales in comparison to Retail jobs. And, with automation increasing, artificial intelligence could replace thousands more jobs in the future.

So why do Semiconductors make the cut in the Modern Family?

The obvious reason stems from her influence in our everyday lives. Try going a day without some form of IT.

That influence translates to the reputation the U.S. has as innovative.

That in turn attracts speculators to the market when SMH is doing well.

SMH tracks the overall performance of the 25 largest, U.S. listed companies that produce semiconductors, a crucial component of modern computing.

The fund focuses on U.S. stocks entirely, offering investors concentrated exposure to America's semiconductor industry.

Since 2012, SMH has gained 200% in price. The peak thus far this year was $89.72.

Technology and investor’s willingness to buy Tech stocks helps the market stay on its feet.

Nvidia (NVDA) makes up 6.11% of the SMH basket. That stock this year traded from $100 up to $169.93. The monthly average volume has spiked as well.

In contrast, the stock price of Intel (INTC) with 11.25% of the SMH’s basket peaked in 2016. Notably, the monthly average volume slowly declines.

The logical conclusion is that Nvidia is crowded with investors while many of the other tech stocks languish.

Without equitable investment throughout the other 24 stocks in SMH’s basket, our Sister’s Wonder Woman status could wane.

If she wanes, imagine how her proud Papa Russell 2000, who has followed his daughter’s lead, will feel?

S&P 500 (SPY) 248-245.68 range to break one way or another

Russell 2000 (IWM) Unless gets back over 140 could see 134

Dow (DIA) Amazingly, another new all-time high

Nasdaq (QQQ) 140.80 support if cannot get back over 144

KRE (Regional Banks) 54.25 pivotal support

SMH (Semiconductors) 85.52 the 50-DMA

IYT (Transportation) 164.33 the 200 DMA. If can clear 166.50 some relief possible

IBB (Biotechnology) 308.50 major support with 322 the place to clear

XRT (Retail) 40.40 support 41.00 pivotal

IYR (Real Estate) Like to see this hold 80.00

XLU (Utilities) 54.00 good place for this to clear and 53.00 to hold

GLD (Gold Trust) 120.00 support

SLV (Silver) 15.25 support. Over 16 looks good

GDX (Gold Miners) Through 23.10 looks good

USO (US Oil Fund) 10.00 pivotal. 10.60 big resistance to clear

TAN (Solar Energy) 21.65 pivotal. Through 21.85 great and under 21.45 could see 21.00 next

TLT (iShares 20+ Year Treasuries) Cleared 124.86 the 50 DMA for an unconfirmed bullish phase-with NFP, anything can happen

UUP (Dollar Bull) Broke the 200-week moving average unless gets back over 24.20

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