Commentary

SMH

Weekly

QQQ is doing the best of the major index ETFs at the moment and SMH is certainly doing it’s share of the heavy lifting.

One of the best and easiest methods to forecast prices is to determine the distance from a swing low to swing high and add that distance to the next swing low to get a price target. My guess from this chart is swing low 80.71 during the week of December 28, swing high 106.27 during the week of March 1. That s a move of 25.56. The swing low of 99.04 during the week of March 8 gives a target of 124.60.

SMH went through a consolidation period from October 2017 through October 2018, before breaking sharply to the downside during the 2018 Autumn of pain. One might get the impression that blue bars are common for SMH, but if prior data is viewed they are quite sparse. SMH had some negative issues from July 2015 through July 2016. That one year period sort of matches the one year consolidation.

Daily

The last 3 candles make an interesting contrast with the oreo made by KRE, which I discussed in today’s market summary. In this case, today’s move gapped up to open near the two day high and kept going. That looks like easy money at first glance, but it would not have been easy for a buyer of the April 12 signal to stay in the trade on April 15 where the stock dipped below the previous days low. The saving grace might have been that it went to the top of the breakout area which is quite a bullish place, but not much comfort when something you just bought moves $2 in the wrong direction. If you want to trade it is best to be able to understand how you will react to various scenarios.

I put a Fib retracement lines from the swing low of 99.04 on March 8 to the swing high of 119,60 on March 21. Notice that it pulled back to the 18 day moving average at the 50% retracement at 104.82. It got close to the 61.8%, we even saw a blue bar on the weakness. Assuming the swing low of 103.99 on March 28 will see a similar 11 point advance, we get a swing high target of pretty much where it is right now.

I’ll buy this on a pullback and appropriate setup.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s