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U.S. equity index futures green: small-cap Russell 2000 up >1%
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Euro STOXX 600 index up >1%
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Dollar edges up; bitcoin gains; gold slides, crude up >2%
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U.S. 10-Year Treasury yield jumps to ~3.50%
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CHIP STOCKS AMONG 2023'S GOLDEN BOYS (0900 EDT/1300 GMT)
Chip stocks have shined brightly this year.
The Philadelphia SE Semiconductor index is up a little more than 23% so far this year versus a 17.5% rise for the broader technology sector , a 13% rise for the Nasdaq Composite , and a 3.4% gain for the benchmark S&P 500 index . Last week, the SOX thrust to its highest level in nearly a year. This, after the index used the former neckline of an inverse head & shoulders bottom as support:
After losing nearly half its value from its January 2022 high to its October trough, the SOX this January completed an inverse head & shoulders, which is a bullish reversal pattern, with a neckline breakout. Frequently, once price exceeds the neckline traders will look for a retracement back toward this line, where it will then act as support. Upon a successful test of the support, the developing advance will resume. The March 23 high at 3,216.322 is now resistance, while the broken neckline is support around 2,815. The inverse head & shoulders minimum pattern projection still calls for an eventual return to levels in excess of 3,800. Such a rally would put the SOX within striking distance of its intraday peak of 4,068 set Jan. 4, 2022. Coming back under the former neckline can suggest risk the pattern is failing.
Meanwhile, 27 of the 30 SOX members are higher year-to-date. But, of note, nine of the top 10 gainers are chipmakers as compared to equipment makers:
That said, since early March, the chipmaker/equipment maker ratio has been caught in a range. A range breakdown may signal a more sustained shift back in favor of equipment makers.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
