Chip Stocks Are Hot Leading Stocks Higher, But Intel May Crash The Party

It was a pretty uneventful day in the stock market at least by the looks of the S&P 500. The semis were the hot sector with both the SMH and SOXX both rising nearly 6% following Lam Research and Xilinx results, Applied Materials and Teradyne also benefitted as they should.

S&P 500 (SPY)

The S&P 500 continues to hold around 2,630, and I continue to see that as positive. The trend is still higher, and I’m beginning to believe we can rise back to 2,690.

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sp500, spx

Lam Research (LRCX)

What may be the most important is that Lam Research has finally broken a long-term down which has been in place since March. It is hard to deny there was a break out in this case. The next area of resistance for Lam comes around $170.

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lam research

Applied Materials (AMAT)

Applied Materials is also rising above a downtrend that has been in place since March. The stock is attempting to break out rising above $37. It could result in the stock soaring to around $41.

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applied materials

Micron (MU)

It is also becoming clear that Micron is now forming an uptrend, and the stock is again testing resistance around $36.50. The stock could continue higher towards $40, which is an area we have waited for, for some time.

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micron, mu

Intel (INTC)

Intel reported results and the guidance for the first quarter was pretty bad, with the company looking for $0.87 versus estimates of $1.01. Meanwhile, Intel is guiding revenue to $16 billion versus estimates of $17.40 billion, a significant miss. The stock is trading down to $46.50 in the after-hours. $46 is clearly support for the stock. But I worry that it won’t hold tomorrow. Very disappointing.

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intel, intc

It is having a negative impact on the SMH and SOXX after-hours, with both now up by 4%. Intel has an 8% weighting in the SOXX and a 13% weight in the SMH, so it will be hard for the two ETFs to not feel the impact.

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Disclosure: Michael Kramer and the clients of Mott Capital own Apple and Netflix.

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's ...

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