Time For Semi Stocks?

I came across an interesting pattern while going over charts and seasonal patterns this weekend. By itself, it's not a tradable system. But it might give me more confidence to stay in certain positions over the next several weeks (of course, with Friday's 367 point drop in the Dow, I would need to see a forgive-and-forget attitude with the market this week before entering any new bullishly-oriented positions).

In recent weeks, I have been noticing strength in some semiconductor stocks. That led me to investigate the track record of semiconductor stocks for this time of year. I looked at the PHLX Semiconductor Sector index (SOX – symbol varies with different data sources). I had 19 years of data to analyze, long enough to draw valid conclusions on seasonal tendencies.

With seasonal patterns, I usually look for ‘win rates' above 75%. The win rate is the number of years the stock, index, or ETF produced a gain over a certain period of time.

In many of the seasonal charts I looked at this weekend, I noticed a slight bump in the win rates for the next 3 weeks. But it was the SOX that had a pattern that stood out. The SOX had win rate bumps at 3 weeks, 8 weeks, 16 weeks, and 21 weeks:

Why did this particular pattern catch my attention?

In 3 weeks from now, Alcoa will announce Q4 2015 earnings. Alcoa's earning announcement is typically treated as the start of the earnings cycle. The earnings release period lasts about 5 weeks. By that time, the majority of companies have released earnings, and traders and investors can get back to focusing on other things.

So of the 4 periods I've highlighted in the table above, the 3 weeks spike happens to coincide with the start of Q4 earnings releases. The 8 week spike happens to correspond to the Q4 earnings cycle ending, where everyone has a good idea how most companies are doing and can decide how to position their portfolios for the next few months.

The next spike, at 16 weeks, happens to correspond to the start of the Q1 earnings release cycle (Alcoa will announce Q1 earnings 16 weeks from now). And the 4th spike, at 21 weeks, is 5 weeks after the Q1 earnings cycle starts.

I did see a 3 week spike in several other index/ETF seasonal patterns, but the 8, 16, and 21 week spikes weren't always there. For some reason, it stands out in just the semiconductor sector trade record.

But with semi stocks currently showing strength, knowing the above seasonal pattern may give me more confidence to hold any current semi stock positions for at least 3 weeks more, and maybe accept the added risk of holding them through earnings, where the SOX has gained an average 7.6% over the next 8 weeks in a high 84% of the years.

In today's Seasonal Forecaster newsletter I cover a promising lower-priced semi stock that has averaged a 9.1% gain over the next 3 weeks, with gains in 14 out of 16 years (88% win rate).

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

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Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.