Option Investor
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Setting up a trade for the Semiconductor Holders

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Traders that are looking to do some short-term trading for a downside move might want to consider the Semiconductor Holder (SMH). With a downward trend looking like it's providing some resistance and our retracement bracket's 38.2% level at $45.14, the technicals look beneficial for a shorting opportunity on a break below $42.75

Semiconductor Holders Chart (SMH) - 60-minute interval

In a fairly tight range trading market, I'm looking for action points (long and short) for stocks and indexes that are close to support or resistance and that have some type of "action point" near current trading levels that could trigger some movement in the direction of the break. The Semiconductor Holders (SMH) might provide the short/put trader with a trade on a break below the $42.75 level. The SMH has been having some problems near $45 and a break below $42.75 could trigger some selling. If this security were to then break below the 50-period MA at $41.36, we could see it then test the $36 level. If the SMH were to trade below the 50-period MA (thin blue) on the above chart, I would immediately move my stop down to break even.

Jeff Bailey
Senior Market Technician

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