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The VanEck Semiconductor ETF May Continue to Decline

Let's check over the charts and indicators.
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The VanEck Semiconductor ETF  (SMH)  is a popular way to get exposure to this industry and cushion some of the surprises that might happen during earnings season. Let's check out the charts and indicators.

In this daily bar chart of SMH, below, I can see that prices have rallied strongly since late October. Prices made a high in March and began showing weakness in April. Prices broke below the now cresting 50-day moving average in April. A recent bounce in the SMH failed at the underside of the 50-day line. 

The slope of the 200-day moving average line is still positive and it intersects down around $175. The trading volume reached a high in March and has weakened (but still active) in April as prices have retreated. 

The On-Balance-Volume (OBV) line has worked lower since the middle of February as traders have shifted towards being more aggressive sellers than buyers. The Moving Average Convergence Divergence (MACD) oscillator is now below the zero line after turning lower in early March.

SMHdaily

In this weekly Japanese candlestick chart of SMH, below, I can see a weakening pattern. Prices are moving lower. SMH is still above the rising 40-week moving average line but the OBV line has turned lower and the MACD oscillator has crossed to the downside.

SMHweeklycandle

In this daily Point and Figure chart of SMH, below, I can see a downside price target in the $193 area.

SMHdailypnf

In this weekly Point and Figure chart of SMH, below, I used a five box reversal filter. Here the software suggests a price target in the $155 area.

SMHweeklyfiveboxpnf

Bottom line strategy: Within any ETF you have some stocks going up, down and sideways. Right now the majority of stocks in the SMH have peaked in March and weakened in April. The move to the downside is not over and traders and investors should act accordingly.

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