Semi Conductor Sector Took Off

"Seek advice from others in your profession who have been successful and who have achieved the goals that you want.  Talk to those who have been through it and have been successful.  Learn."

By Elgin Baylor, Basketball player.

Market went into retracement Feb 25th when the leading growth Stock index  $QQQ  breached the 50 day sma (simple moving average) line.  Semi conductor sector however was held up above the 34 day ema (exponential moving average).  Some of the stocks in this sector were help up above the 21 day sma.  That is a sign of institutional support.  While the market was retracing towards the latter part of February from the institutions harvesting profits from the technology names, semi conductor sector was being firmly held up.  This is the sector that is powering up our new economy that is being technologically driven.  Covid has speeded up the transformation of our lives as to how we work, play, travel, shop, bank, eat out and educate our children.  Genie is out of the bottle and it's not going to go back.  

Last couple of weeks, there was so much talk in the media about the  'Value Stocks'    We were constantly bombarded with the concerns being raised about the rising inflation and how it adversely affects the growth Stocks.  As a Growth Stock investor and a trader, one must not concern themselves too much with  PE  ratios of a stock.  Growth Stocks are valued for their future earnings.  Value stocks were devalued during the pandemic.  Some of these value stocks may have met their demise from the pandemic and may never come back to their glory days.  I grew up with Sears, JC Pennys, Kmart and banks being open only Monday to Friday 9.00 am to 5.00 pm.  All that has changed and now we do all of our shopping online and never ever visit a bank with the ability to do online banking 24/7.  Legal documents are signed online with docu sign too and court cases, conferences and learning is all carried out with zoom platform.  Most of us will be working from home and not spending 2 hours every day commuting.  Lot of these innovative ways that has transformed our lives has been due to the advances made in the semi conductor industry.

One of the hedge fund managers that has the foresight to identify the future trends is Cathie Wood of  ARK  invest fund.  She has been in the lime light lately with some of her bold investment in  $TSLA   and her target of that stock reaching  $3,000.  $AMAT   was a  $20  stock 5 years ago and I distinctly remember highlighting that stock during a meeting at IBD( Investors Business Daily) local meetup group in the Tampa Bay area of Florida.  Today that stock is  $142.90.  Here is a link to hear some of the views of Cathie Wood.  I found it to be very interesting.  

https://youtu.be/G9yciyMZURM

Semi conductor sector has brought us some true market leaders in the past 5 years and continues to present opportunities under current market environment.  There were 8 semiconductor stocks out of the 19 that I had highlighted in my blog post last Sunday March 28th.  They all had broken out on Friday March 26th.  Here are the results of their performance last week:

Stocks:

1. $AMAT   ... +11.09%
2. $ASML   ... + 1.83%
3. $ENTG   ... + 9.15%
4. $ICHR    ... +14.30%
5. $INTT     ... +11.26%
6. $KLAC   ... + 9.39%
7. $LRCX   ... + 9.94%
8. $UCTT   ... +11.68%

Average performance =  +9.83%

These stocks are now extended but there are other stocks in the group that might be worthy of being scrutinized.  They are:

1. $AMKR
2. $ACLS
3. $BRKS
4. $COHU
5. $IPHI
6. $LSCC
7. $MCHP
8. $MKSI
9. $NVMI
10. $NXPI
11. $ON
12. $ONTO
13. $QRVO
14. $TXN

Good luck trading this week.

Happy Trading!

Amin