By Nicholas Santiago on July 13th, 2010 3:45pm Eastern Time
As we all know the major market indexes are extending their gains today from the July 1st pivot low. This market bounce higher has been nothing short of sensational as the indexes have advanced over 8.0 percent from the July lows. While the indexes are getting extended it is still possible to see more upside. However, one industry group should be hitting resistance very soon and that is the semiconductor sector.
The Semiconductor Holders Trust (NYSE:SMH) has had quite a rally from the pivot low on July 1st when it traded as low as $25.21. Today the Semiconductor Holders Trust is trading higher by 0.61 to $28.20. This highly followed ETF holds a basket of the most popular and widely held semiconductor stocks. The Semiconductor Holders Trust should have good daily chart resistance at the $28.50 - $28.85 level. Therefore, the ETF could still see further upside before reaching that resistance area and pulling back or consolidating.
Texas Instruments Inc (NYSE:TXN) is a leading chip stock that has also had a sharp move off the lows. This stock is now trading into an important daily chart resistance level at the $25.40 - $25.75 area. Should the stock trade above this area watch the $26.50 level as the next important support area. Pullbacks from this current level are likely if the overall market pulls back or takes a breather. In any case this is a likely profit taking area for this stock.
Broadcom Corp (NASDAQ:BRCM) has been one of the leading technology stocks since mid-May and continues to remain strong. This stock is currently at a resistance level on the daily chart and is getting a little extended. This stock does have good relative strength compared to most of it's peers. However, at this level many professional traders may look to take profits and wait for a pullback before jumping on board.
The semiconductor sector has had a tremendous bounce recently along with the stock market indexes. While the group looks strong at the moment it will be reaching important resistance levels shortly. It makes you wonder if the Intel Corp (NASDAQ:INTC) earnings report will be a sell the news event. The past few times that Intel Corp has reported earnings the stock has sold off shortly afterward. We shall see soon enough as Intel Corp reports earnings after the bell today.
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