Editors Note:

This is the common denominator within all tech stocks. Semiconductors are the building blocks of every tech products. Even Adobe, Microsoft and Facebook rely on chips to power the devices that powers their services.


SMH - Semiconductor ETF - ETF Profile

VanEck Vectors Semiconductor ETF (SMH) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Listed Semiconductor 25 Index (MVSMHTR), which is intended to track the overall performance of companies involved in semiconductor production and equipment. The index seeks to track the most liquid companies in the industry based on market capitalization and trading volume. Industry Leaders: Index methodology favors the largest companies in the industry. Global Scope: Portfolio may include both domestic and U.S. listed foreign companies allowing for enhanced industry representation.

The semiconductor sector leads the Nasdaq because chips affect every tech product and service. The semiconductor sector was down -8% at the low on Friday in only four days. The decline stopped at the 50-day average, which has been support several times over the last year.

If the Nasdaq is going to move higher the chip sector will lead it.

Buy Feb $100 call, currently $3.50, no initial stop loss.
Sell short Feb $105 call, currently $1.15, no initial stop loss.
Net debit $2.35.


No New Bearish Plays