Last week our stock scans were populated with many semiconductors which suggested related strength in these stocks. We looked for these stocks to outperform in the short-term as the indices dropped following the December OPEX.
Following expiration, semiconductors held near the 50d moving average. Micron Technology (MU) broke out to a new high after its earnings report, confirming our suspicion that semis might be in play. It was also Tuesday’s IBD Stock Of The Day.
S&P 500 Daily Chart
The S&P 500 reversed on Monday December 20, the first trading after quad witching “dealer” hedges came off . More than 30% of S&P, SPY and QQQ open interest expired.
NYMO reached (-55) intraday as breadth deteriorated. Every day since, NYMO has improved closing at 50.40 on Monday December 27, just a week later.
Click to enlarge.
MACD, RSI and Stochastic are bullish.
SMH – Semiconductors Daily Chart
We were looking for relative strength as the S&P 500 pulled back on Monday December 20. That relative strength showed up in semi conductors, among other sectors, on Tuesday as the sector bounced on above average volume.
Volume was above average on the Tuesday following OPEX.
Advanced Micro Devices (AMD) and Nvidia (NVDA) showed similar volume. ON Semiconductor (ON), Marvell (MRVL), Lam Research (LRCX) and Broadcom (AVGO) were additional candidates that were noted during the live broadcast. All of the these semiconductor stocks showed strength yesterday, suggesting this 3 week consolidation has legs.
Tesla, Google, AMD and TW are on IBD Leaderboard. AMD stock has been on the IBD 50 for a couple weeks.
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Relative volume (RVOL) was elevated on Tuesday as you can see in the 5-day chart of AMD. Nvidia showed similar volume.
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Happy Trading,
Vinny
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