Semiconductors Reversed At A Critical Level

I believe that semiconductors ($DJUSSC) are the most important industry group.

It doesn't mean that the stock market can't move up or down without participation from this group, but it certainly makes it more difficult. The DJUSSC topped on the last trading day in March. The S&P 500 continued pushing slightly higher for another couple weeks, but ultimately could not clear the major price resistance established in early February. One big reason was the lack of participation of semiconductors. Fortunately, the group is in a much better position to move higher from here:

Enter Semiconductors ($DJUSSC):

First, note how many times the DJUSSC failed to clear resistance in the 7200-7400 range. I count 9 attempts with zero successes (red arrows) until finally breaking through in mid-March. That key price resistance then becomes price support. Clearly, this support held on the first attempt as the DJUSSC moved beneath 7200 briefly, before reversing with a hammer candlestick printing. That's generally a signal of a reversal and higher prices ahead. The DJUSSC also has a bullish trendline that began in mid-October 2022 and connects the low in December and today's low. This trendline intersects with the current price support zone. It's also important to reverse here as the daily PPO has just moved slightly beneath centerline support. The AD line is exceptionally strong and the DJUSSC:$SPX ratio is touching support as well. The direction of the S&P 500 is likely going to follow wherever the DJUSSC goes from here.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.