This market feels horrible. For are tremendous opportunities out there but they are only visible to those that can stay unbiased and get rid of doomsday narratives that are going viral currently, as explained in our piece 7 Secrets of Successful Investing. Many of them are suggested in our 2023 forecasts, none of our forecasts got invalidated by ongoing price action so far. Here is another one: semiconductor stocks.
We are looking at structures on charts to assess risk vs. opportunities.
If we apply structure to the semiconductor stocks we have a very clear take-away: OPPORTUNITY.
Below is the SOXX ETF chart, a long term chart with weekly candles.
One thing that stands out is the long term channel. Whatever happened in September and October of 2022 may have felt disturbing, scary, uncertain, but remember that those are feelings. In the bigger scheme of things, as seen on below chart, it was a rather violent test of key support on the long term trend channel.
While October might not have been an easy to justify ‘buy the dip opportunity’ there certainly was a justified buy the dip in December. That’s when it became clear that semis ‘broke out’ of their downtrend line, see red falling line on below chart. There was a perfect back-test of both channel support and the red falling trendline got back-tested.
In terms of pattern, the ongoing chart setup starts looking a lot like an inverted head and shoulder, right at support of the long term rising channel.
Opportunity! Do you see it?
We do and we added 2 gems in the semis sector to our Momentum Investing portfolio. Both have beautiful, absolutely beautiful chart setups. They have strong financials and key ratios. We will keep those semis for the mid to long term.
