The Philadelphia Semiconductor Index (SOX.X) has now taken over today's sector leader after Prudential Securities said that its industry check lists do no show an material types of delivery "push outs," which is contrary to market speculation. While the semiconductor book-to-bill release typically doesn't necessarily serve as a catalyst for short-covering, given current bearish sentiment that orders have stagnated, Prudential believes a positive report could act as a modest catalyst for further gains.
Semiconductor Index Chart - Daily Interval
Bears may have taken an opportunity on Friday to lock in some bearish gains in the semiconductors as the SOX.X fell to our 80.9% retracement level. With the sector bullish percent from Dorsey/Wright and Associates reading just 17.8% bullish, the sector has been "oversold" and below the 30% level for several sessions. Historically, the semiconductor bullish % from Dorsey/Wright has shows bottoming in this sector risk indicator near the 20% level, with some dramatic and powerful reversals higher from spikes to the 8% level.
Shares of often-mentioned sector bellwether Intel (NASDAQ:INTC) $22.38 +5.16% are holding strong near the $22.00 level. Subscriber will perhaps remember Jim Brown's comments from June 7th just after Intel's mid-quarter update when the stock was getting hammered at current level that a longer-term call option would be attractive.
It has also been noted that Intel (INTC) had achieved a bearish vertical count of $22 on June 7th. Currently, it would take a trade at $32 for Intel (INTC) to generate a "buy signal" and contribute bullishly to the semiconductor bullish % from Dorsey/Wright and Associates.
With sector risk for bulls rather low at 17.8%, a bellwether stock in the semiconductor group like Intel (INTC) would be one of the first place we would look for institutional sponsorship.