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Market Updates

Semiconductors still hanging tough

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Despite some "bad news" in the semiconductor sector from Texas Instruments (NYSE:TXN) the Semiconductor Index (SOX.X) pulled right into our 50-period MA on the 60-minute chart and has bounced nicely. The index looks range bound between 688 and 728 but still looks technically strong.

Semiconductor Index Chart - 60-minute interval.

The SOX.X looks range bound for the moment, but traders know how fast things can change. Some traders on IndexSkybox.com may have moved to the sidelines and booked some profits yesterday and realize this index is still below the 710 level. Even traders that will do some "phantom trading" and monitor artificial trades find themselves more confident with their observations and gain insight into the markets. We can't trade everything, but we can still follow an observation or decision.

Nice... Very Nice!

Index traders might want to take a look at the Networking Index (NWX.X) here at 837.

Networking Index Chart - 60-minute interval.

I just saw this test of the NWX's upward trending support. This looks good for a bullish trade with targets set at 875 and then again at 945 for swing-traders. Good low-risk trade with a stop just below upward trend at 810. Traders might also want to look at some stocks with a networking theme to see if there are some similar patterns to be bullish in.

Still Confusion regarding YIELDS and Interest Rates

The bond markets can be confusing and what we "hear" and what we "observe" are two different things. I want to STRESS that BOND YIELDS are very different than INTEREST RATES. In essence, the market controls bond yields as it buys and sells bonds. When the market is selling bonds, YIELDS are rising. The Fed controls INTEREST RATES. If you don't believe this, or really want to understand this, look at a chart of the TYX.X. Didn't the Fed just cut INTEREST RATES? Isn't the YIELD on the TYX.X moving higher? What have some stocks as represented by the NASDAQ been doing since the TYX hit a low yield of 5.319% January 03, 2001? This was a day BEFORE the Fed cut rates! PLEASE look at a chart of the TYX.X on a weekly interval (gives you a big picture) and look at certain highs and lows of its YIELD. Write down those dates. Then look at a weekly chart of the NASDAQ Composite (COMPX). When YIELDS went up, what did the NASDAQ do? Remember that YIELDS have been dropping over the past year! What has the NASDAQ Composite been doing?

Jeff Bailey
Staff Analyst

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