SMH makes its move

The exchange-traded fund that tracks semiconductors, SMH, has made its move on the third day since it moved into overbought territory on the money-flow index.

I discussed that signal in a post on Feb. 19.

Today, SMH is trading at $26.02, or 2.8% below yesterday's close. Altogether the price has traversed 2.6% high to low so far today.
The decline creates a lower high from the peak of $28.72 set on Jan. 11. A bear trade would count as going with the trend.

SMH is now trading in a four-day-wide area of congestion from late January, and a three-month-wide congestion zone from July through October 2009. I would put support in the $25.50 to $24.50 range.

---

The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategies

---

It's a with-the-trend trade, but I don't think further gains will come easy. An alternative interepretaton of the trend would be sideways from July 2009, with the January peak being an overshoot rather than the end of an uptrend. If that's the case, then the trend is sideways and would be played with a iron condor or calendar spread rather than directionally.

The macd remains in bull territory.

Also, it's worth noting that a lot of exchange-traded funds and corporate shares are showing a reversal from a near-term high. The move, which the media narrative credits to declining consumer confidence, is quite broad, although mainly without technical signals.

SPY and the S&P 500 reflect that broad move, showing what good avatars they are of the market as a whole.

New to Private Trader? Check out the Reader's Guide.

New to private trading? Here's a look at How to Become a Private Trader.

Topic:
Semiconductor HOLDRS.