A Good Time for Semi Stocks?

Friday was a good day for semiconductor stocks. While the NASDAQ Composite managed a 0.50% gain, a number of components of the Philadelphia Semiconductor index logged bigger gains. Avago Technologies (AVGO) and NXP Semiconductors (NXPI) did especially well, due to Apple iPhone rumors. They both will be supplying chips to the iPhone 6, and there is speculation that new model will be very popular.

As many of these semi stocks are nearing Stochastics overbought levels, I get curious about the seasonal track records of these stocks. Is there a history of institutional participation in these stocks this time of year to to back up these moves?

It turns out the Philadelphia Semiconductor Sector Index (SOX) does have a good track record over the next 6 months, but over the next 5 weeks it has not done so well, averaging a 4% loss, with losses in 10 out of 18 years, several of them 20% or more.

Many of the top semi stocks have similar seasonal patterns, showing average declines over the next 5 weeks before good gains after that.

Yes, this may be the year institutions fall over themselves to accumulate semiconductor stocks, which in the past have often lead tech rallies. But with the poor seasonal patterns, I'm more likely to believe a short-term cycle high is forming, or will soon form, and profit-taking will come in. I believe about 5 weeks from now will be a better time to consider ‘semi' plays.

Today's Seasonal Forecaster newsletter covers a tech stock with strong ratings, a 21% increase in funds holding the stock, and an average 17% gain over the next 17 weeks with (mostly double-digit) gains in 22 out of 24 years.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2014 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.

Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.

As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.

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