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Semiconductor Support

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Productivity numbers aren't helping stocks be more productive. The Dow is 20 points lower out of the gate, and the Nasdaq is down 12. The Semiconductor Index (SOX.X) might help to control the fate of the Nasdaq.

Semiconductor Index Daily Chart

The SOX is trying to move higher but one by one its components are dropping into negative territory. Only Intel (INTC), Altera (ALTR) remain in positive territory, and just barely.

Support at 537 has been strong for the SOX, with the exception of April, and it looks like once again that level is going to be tested. The stochastic is getting close oversold, which suggests the sector is due for a bounce. The last bounce came up well short testing the upper boundary of the trading range between 537 and 650, and 611, where the last bounce failed, should provide resistance for any potential bounces. But that's assuming the SOX can bounce. Right now it just needs to focus on holding at support.

KLA-Tencor Daily Chart

KlA-Tencor (KLAC) has lost support at $47.56, but is trying to climb back above the 38.2% retracement level. KLAC has dipped below this level over the past few months, but has been able to climb back above. This time the 200-day moving average is rising to help push the stock back above, but we shall see. If the 200- dma is lost, KLAC could be in trouble.

Jeffrey Canavan
Assistant Analyst

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