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Oversold Chip Stocks Could Squeeze Complacent Sellers

Alan Farley

The PHLX Semiconductor Index (SOX) shook off weak guidance from NVIDIA Corporation ( NVDA) and Applied Materials, Inc. ( AMAT) on Friday, Nov. 16, closing lower but holding above the most recent downtrend lows. If so, the tape into mid-December will reflect more bullish price action, with a rally back to resistance above 1,300 on the semiconductor index. This breakdown signals the first semiconductor bear market since 2008, when the group was engaged in a two-year 70% decline.