The Semiconductor Cycle Becomes Obvious
The cycle has turned. Scaling into semiconductor stocks over the past few days has worked for us. Now the cycle is obvious. New buyers will have to negotiate higher prices. That said, the current cycle should last near the same number of days as the previous up cycles. Consider selling some of your swing positions only when we enter the red zone.
Adding to bullish positions makes sense now, as most of these companies will benefit handsomely from the tax-reform package about to go into law. Analysts will begin upgrading companies once they have a better understanding of the change in earnings.
Semiconductor Stocks
Below is the list of stocks we are currently considering. Best bets are candidates from the IBD50, breaking out of sound bases, as TXN did last week.
We currently have a position in NVDA. We will add as the stock continues higher and trail our stops below the 9/20ema.
NVDA formed an “Inside Bar” yesterday, pointing to a continuation of the short-term trend if the stock can manage a move above the 20sma in the short-term. RSI and MACD suggest that might be possible.
Inside Bar
The Inside Bar Breakout Strategy is based on accumulation and distribution or consolidation at key support and resistance zones. Watching big players positioning in block size increments assists in these observations.
Semiconductors are higher in the pre-market session with Micron (MU) reporting a beat after hours. Profit margins have soared to 55.1%. That said, we will wait for the Opening Range and use the Trade of the Day Setup for entry, exit and stop.
We will start our Livestream broadcast at 9:20 AM. (LIVE trading during market hours.)
Happy Trading,
Vinny
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