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Semiconductor, Networking and Biotech lead NASDAQ gains

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Semiconductor (SOX.X), Networking (NWX.X) and Biotechs (BTK.X) indexes are leading a nice turnaround in the early part of this morning's session. Almost a reversal of yesterday's action, early weakness this morning has been turned around and some of the broader market averages have gotten back into positive territory.

Semiconductor Index Chart -

The Semiconductor Index (SOX.X) is our current sector leader with a 3.37% gain at $458. Bulls will be targeting the falling 50-day MA and our 50% retracement of $479. Current trading levels make it tough to identify an action point and traders could be using the strategy of trading 1/2 position (bullish or bearish) to help control risk in their account. Right now, I'm tending to be slightly bearish in the Semiconductors. I would turn more bullish if the S&P 500 Index (SPX.X) were to get above its falling 50-day moving average at 1,100. Currently, the S&P 500 (SPX.X) is trading 1,086.

S&P 500 Index Chart -

I basically have a "neutral" bias toward the S&P 500 Index. Near-term range that controls my bias is 1,082 to 1,100. We won't have to wait much longer to see which way things break. Yesterday, the falling 50-day MA sure acted like resistance near the opening of trading, so that level has to be broken to the upside to move me to a more bullish stance.

This morning I mentioned that the S&P 500 bullish percent was "bull alert" and in my book, that is reason enough to be adding some bullish positions. A trader just doesn't want to get carried away on the upside at this point. Bullish positions entered here will be targeting the 1,126 level and a good near- term benchmark, with the clear test of an upward move coming at the 50-day moving average. The internals have been improving as indicated by the bullish percent.

Jeff Bailey
Senior Market Technician
Option Investor

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