I Refuse to Weep

On Wednesday, Linear Technology (LLTC) surprised Wall Street with some upbeat guidance and the market seized upon it with a vengeance. The pin action was intense, and the result was a breakout in iShares PHLX SOX Semiconductor Sector Index Fund (SOXX). SOXX -- Weekly Source: Investools.com View Chart » Not only did SOXX break higher, but volume expanded as well. I haven't seen that type of buying in any sector for months, and it was one of the key reasons for my disbelief in this market. The charts below are all weekly charts. That's because I'm asking whether the stocks and the sector will change their intermediate-term trends -- and most of them will, unless the market witnesses intense selling Friday. This pokes a big hole in my idea that earnings season would bring on the selling. The selling will still come. However, given that this important sector -- the chipmakers -- is not only breaking higher, but doing so with volume, it is unlikely to be the kind of selling I had envisioned. Rather than defining an intermediate or long-term top, the action is more likely to just define a short-term top. Rather than cry in my beer, I'm moving on -- and asking where the opportunity in this sector will be when the next retracement sets in. Here are some names that look to have more juice to come. They all reacted well to the Linear-inspired rally and, if they close near the current price points with volume continuing at the run rate seen so far this week, they will also see positive weekly transitions in trend. I would be looking hard at each one as potential purchases on the retracement. The other possibility is to forgo the risk of an earnings blunder (most still have earnings to come) and go with the broader SOXX. Texas Instruments (TXN) -- Weekly Source: Investools.com View Chart » The volume here is a toss-up, but clearly the price will extend to new highs for Texas Instruments (TXN). Maxim Integrated Products (MXIM) -- Weekly Source: Investools.com View Chart » Maxim Integrated Products (MXIM) is really interesting here. Not only is it getting the weekly trend transition, but it's potentially seeing far more, and volume has already expanded. On Semiconductor (ONNN) -- Weekly Source: Investools.com View Chart » On Semiconductor (ONNN) is likely to get the volume follow-through and has already easily overtaken the swing point. There are some resistance zone concerns but, then, I am talking about buying the retracements when they come. That's likely to be reasonably soon, given how extended the market currently is. Vishay Intertechnology (VSH) -- Weekly Source: Investools.com View Chart » Vishay Intertechnology (VSH) is another possibility -- although it, too, may have problems getting the volume expansion on the weekly basis. Then of course, there's the stock that started all of this -- Linear Technology. Linear Technology (LLTC) -- Weekly Source: Investools.com View Chart » Lastly, on the Intel (INTC) conference call last night, there was some surprise about the size of the company's capital spending in 2012. The companies that may get pin action off that today include KLA-Tencor (KLAC) and Applied Materials (AMAT). Both are set to break above swing points on their weekly charts as well -- and, if they don't give good entry points today, in the coming pullback they will likely end up as good retracement candidates to look at. Have a good weekend and, until next time, just keep trading the charts!

I Refuse to Weep

My bearish stance is getting hammered by chipmakers -- so I'm moving on and looking for opportunities.

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