Trading Strategy – VanEck Vectors Semiconductor ETF

One of the noteworthy developments in recent days has been the move in semiconductors.  The group has been under selling pressure in recent days after Morgan Stanley downgrades the semiconductor industry from in line to cautious, citing rising chip inventory levels.  The VanEck Vectors Semiconductor ETF (SMH) fell 2.35 percent Friday, bringing its YTD gains down to 8 percent.  Now the question is whether recent selloff is a pause that refreshes or it’s a beginning of something worse?  Below is an update look at a trade in SMH.

The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges.  As shown, the underlying is in a short-term bullish trend when the price bars are painted in green.  The underlying is in a short-term bearish trend when the price bars are painted in red. 

Chart 1.1 – VanEck Vectors Semiconductor ETF (daily)

Our “U.S. Market Trading Map” painted SMH bars in red (sell) – see area ‘A’ in the chart. Over the past few weeks, SMH has been trending higher in a short-term corrective mode after the late June selloff found support near the 1-year moving average. There is a distinct possibility that a bear flag formation is currently setting up in the weekly chart of SMH…Click here to read more.

You see, our trend-following system is very unique as it attempts to pick turns before others see them. Timing is everything and if you’ve applied our system correctly, you should have made a killing in any markets.


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