Semi’s Get Smashed, but Guess Who Saved the Day

April 19, 2018

Mish's Daily

By Geoff Bysshe

blankToday’s analysis is by Geoff Bysshe. Mish will return Monday April 23rd.

Over the last week I’ve mentioned that the Modern Family was not in a good mood, and SMH in particular, was stubbornly reluctant to join the rally.

So it’s not surprising that a weak earnings report from its largest member (TSM) led to a painful drop in SMH today.

Furthermore, TSM’s guidance was weak and suggest there may be slowing demand for smartphones.

This led to AAPL having its worst day since the ugly selloff in February.

With news like this, things could have gotten ugly today, but…

Fortunately, the woes of the semiconductors didn’t lead to large declines in the other areas of tech. For example, the XLK was down 1.2% vs. SMH down 4.3%.

In fact, if you were just looking the major indexes, today looked like a healthy selloff day.

I use the word ‘healthy’ because the market also got support from an unsuspecting Modern Family today.

As tech was falling, the financials were rallying. Perhaps in part due to AXP rallying 7% on good earning.

Or maybe because of the drop in bond prices (higher interests rates).

Either way, if the market can find support in the financials when tech is under pressure, that’s a healthy feeling of sector rotation.

Key Sectors:

S&P 500 (SPY) Next big resistance at 275. Held 268 support. If that breaks 266 is next.

Russell 2000 (IWM) continued to run like a leader, but closed in decisively at stopping at logical resistance. Look for support at 155.50-156 then at Friday’s low and 152.

Dow (DIA) Key support around 244-245, support at 241.40 and 235.

Nasdaq (QQQ) Next big resistance area 169.50-170. The 50-DMA is 163.87 is now initial support, then 161 then 160 and 159.25. Then 153 is the big low level.

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