A Focus On Our Moody Sister Semiconductors

Coming into today, we had eyes on Semiconductors SMH.

The reason is that our sister of the economic Modern Family has led the recent rally.

With the Russell 2000 IWM and Transportation IYT relatively weak, SMH had to hold up in order to keep her siblings together.

Before the dovish FOMC announcement, it looked like SMH was destined to join her Granddad and Brother in the rubble.

However, right on cue, Jerome Powell and the gang came out with the statement that they will keep rates the same and not raise them until 2020.

So maybe the real moody little sister is Powell.

Regardless, those words temporarily boosted SMH from a potential nasty topping reversal signal.

Until late in the day.

Not everybody in the Family bounced as happily though.

Regional Banks KRE and Granny Retail XRT, are now in bearish phases on the Daily chart.

Transportation IYT ended the day in an unconfirmed bearish phase (needs another close under the 50-DMA to confirm.)

With so much disparity, who is the moodiest one of all?

(Click on image to enlarge)

The chart is a weekly one with the blue line the 50-WMA and the green line the 200-WMA.

Besides Biotechnology, SMH is the only other Family member in a weekly bullish phase.

IBB and SMH are the two most highly speculated members of the Modern Family. Hence, no surprise that the public interpretation is that the Fed can keep the money pumping indefinitely, which will, in turn, keep the economy and market in good shape.

I’m not so convinced.

In fact, I’ve made no secret that I believe this trail to lower rates and a lower dollar will lead to a stagflation environment.

Just look at gold. That had a way better rally than the indices and held that rally into the end of the day.

IYT, IWM, and SMH did not.

Who is the moodiest one of all?

Besides the Fed?

I’d say the bulls in the Family.

Or at least they will be when they realize that monetary policy is out of control.

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Susan Miller 1 year ago Member's comment

Moody is right!

Michele Schneider 1 year ago Author's comment

Look at her today-back to her wonder woman self!