Are The Semiconductors Sending A Warning Sign?

This morning, many of the leading semiconductor and semiconductor equipment maker stocks are coming under heavy selling pressure. Leading stocks in the industry group such as Lam Research Corp (NASDAQ:LRCX), Western Digital Corp (NASDAQ:WDC) and Micron Technology Inc (NASDAQ:MU) are trading down by more than 4.0 percent on the session. Often, the semiconductor stocks will lead the tech heavy NASDAQ Composite. It has been viewed by many traders that when the semiconductor stocks lose their strength it can be a precursor of a possible correction in the technology stocks.

Many traders such as myself will follow the VanEck Vectors Semiconductor ETF (NYSEArca:SMH) as a proxy for the semiconductor sector. Today, the SMH is trading lower by $1.71 to $104.04 a share, this is decline of nearly 1.70 percent. Traders should note that the SMH is still trading above its 20-day moving average, so this tells us that the trend is still up for the industry group despite today's decline. Should the SMH start to trade below its 20-day moving average then we would really start to look for a break of the trend, but right now the trend in the semiconductor sector still remains up. Traders will now need to keep a close eye on the semiconductor industry group going forward.





Nicholas Santiago
InTheMoneyStocks