Semiconductors Go Parabolic? Is It a Blow-Off Top?

The Market

It’s nonstop chatter about the semis. I suppose because they truly are the hottest stocks in the market right now. But let me stop for a minute and discuss the charts. There are chart people who say it is a blow-off. It may be.

Is it a parabolic move? Yes and no. It’s parabolic because of how much it has exploded since the lows. But let me note that the SOX corrected nearly 20% in February and March. Let me also note that for the final two weeks of April, the SOX corrected five percent. Yes, it was five percent. In my experience, parabolic moves do not even bother with a correction.

This doesn’t mean I love these stretched charts. They are not my style. But even Advanced Micro Devices (AMD) , which reported earnings after the bell, has been milling around for weeks. You might recall during the March sell-off, I kept highlighting this as one of the three semis to watch (NVDA and AVGO were the other two). I noted that as long as this 180 area held, the stock was okay. Now look at it, it went sideways from October through mid-April. That’s a long time to do nothing.

In fact, if I do some measured targets, it’s only just beyond the measured target (330-340). But my point is, the stock may be stretched, but it has rested along the way.

Intel (INTC) looks different and is beginning to look more parabolic, but here too, the stock went sideways for two and a half months before the recent breakout. It even paused for a few days at 65. What it has done since the gap up is run away and therefore has a more parabolic look. It’s all subjective.

Again, these are not my kind of charts, but they haven’t done anything wrong yet. They are extremely overbought. I figure when/if the DSI on Nasdaq gets over 85 (currently 80), that will be a sign.

New Ideas

If you want to put a tech stock that has moved with the semis on your radar as one to watch for an early sign, then put Jabil (JBL) on your watch list. It reversed out of nowhere today and has been milling around for a few weeks now. A break under 325 would signal a correction is at hand (just as we are about to get intermediate-term overbought next week)

Packaging Corp of America (PKG) has nothing to do with semis or tech that I know of, and it looks so different than say International Paper, but I am drawn to stocks that scoop under as this one has.

Today’s Indicator

The McClellan Summation Index is still stalled. It has not rolled over yet.

Q&A/Reader’s Feedback

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Oracle (ORCL) is trying to make a bottom. The small bottom it has developed measures to the 190-200 area, although I am also eyeing that gap near 218-220. But let’s first see how it handles that first area at 190-200.

There are no measured targets left for Sandisk (SNDK) . Is it parabolic? Not really. Parabolic is when it goes up without a rest. But the stock spent much of February and March digesting the move up in January. Does it need a rest? Definitely. Does it need a pullback: Yes.

Throughout NVIDIA’s (NVDA) sideways action in the fall and first quarter, I maintained that as long as the stock held 165-170, it was okay. I still maintain that. But let me note that NVDA has a habit of doing these long sideways moves, threatening to form a top, and then it resurrects itself. For now, I would say support is back at that line around 185. I do not expect the stock to be great for a while because that’s its pattern. Someday it will make a series of lower highs and lower lows, and it will be a top. Thus far, I’m willing to give it the benefit of the doubt.