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Dropping Semiconductor HOLDRs (SMH)

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PremierMarkets.com is suggesting that bearish traders playing our profiles full position short in the Semiconductor HOLDRs Trust (SMH) from May 9th at $50, look to capture profits from this bearish trade at the $46.60 level. Our bearish target was the 200-period MA when the trade was profiled, and current trading has us looking to lock things in here. We will no longer be following this trade as our original target has been achieved.

Semiconductor HOLDRs (SMH) - 60-minute interval

Traders that may have shorted a full position should be looking the gift horse in the mouth at current levels. MACD on the above chart is below the zero level and this index recently has traded at our bearish target, the 200-pd MA. With the Fed OMC meeting tomorrow, a full position short in this index is more than PremierMarkets.com would be willing to risk. Experienced traders often times feel it is good to lock in gains on bearish trades at points that look to provide "ultimate weakness" on the charts. Current feeling here is that there is more short-term risk to a bearish trader carrying a profit with a pending Fed rate cut from tomorrows Fed meeting.

Jeff Bailey
Senior Market Technician

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