Category Archives: Sector Rotation

Oct 13

Semiconductor ETF (SMH) rides on semiconductor growth in 2010

Posted on by
91
Thanks!
An error occurred!

Semicondutor industry is a cyclical industry. It is forecasted this industry will grow at a minimum of 10% in 2010. Recent semiconductor industry reviews:

  • Global semiconductor revenue could grow about 10 percent next year after two years of declines, as new computers and feature-jammed smartphones help boost chip demand – Gartner
  • Global pure-play semiconductor foundry revenue will decline about 11% in 2009, but then increase 21% in 2010 – iSuppli
  • The chip sector has been struggling over the last few years as the global economy, oversupply, and price pressures have stalled sales. But as the oversupply and under-demand cycle has stabilized, sales have improved, according to recent reports from the Semiconductor Industry Association.
SMH is the Semiconductor HOLDRs trust ETF and its top ten holding as follow:

SMH broke the long term Fibonacci 61.8% resistance of $24.763 and this level had become a very strong support level.
SMH is currently testing its another strong resistance at $26.24. If SMH can stay above this resistance turned support level, the uptrend is confirmed. Otherwise, it may retrace back to $21.809. SMH has not retraced back to this 61.8% Fibonacci level yet to build the base for future up trend. SMH is currently above 20D, 50D and 200D MA.
Oct 09

Is Material ETF (XLB) ready to run?

Posted on by
86
Thanks!
An error occurred!

The Material ETF (XLB) is another ETF which will be benefited from the economy recovery. Raw material is the basic of all manufacturing products & infrastructures. Those mining companies and material makers will be doing well when there is huge demand of the basic material during the economy recovery. Another point to note is China is buying energy and material companies aggressively to ensure enough resources for future growth.

This XLB is primarily composed of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products. Among its largest components are Monsanto, E.I. DuPont de Nemours & Co., and Dow Chemical Co. Top 20 stocks as of Oct 8, 2009 as follow:

The ETF is currently is on the long term up trend (200D MA on the up trend). 3 years high at $46 and current price is about $31. The immediate support level is $28.739 and subsequent support at $26.776.
My investment Plan
Entry Level: Between $27 and $29 (but need to monitor whether the price is still above 20D & 50D MA)
Time Frame: 1 to 3 year
Sep 10

XLI – Industrial ETF for long term investment during economy recovery

Posted on by
54
Thanks!
An error occurred!

XLI is another ETF that I am watching closely. When the economy comes out from recession and starts the recovery, the companies from this sector will start to manufacture capital equipment, machinery, engines for transportation, etc. Every company needs to have those infrastructures & equipment in place to expand their manufacturing capacity to produce the goods during the economy expansion. The top 20 companies for the XLI ETF as of Sept 9, 2009 is listed below:

As of Sept 9, 2009, XLI ETF is traded at $25.96. It is trying to break the strong resistance of $25.445 (61.8% Finonacci Retracement Level). XLI is currently above 20D, 50D and 200D MA line. 200D MA, a long term trend has reversed and currently on the up trend. I will wait for see whether XLI can break the resistance and stay above the $25.445 in Sept / Oct before I put my money into this fund.