Three different semiconductor stocks, three different ways of
looking at a pullback.
Leader of the semiconductor pack,
) has traded lower for the past two days in a row, but is not yet
in technically oversold territory. Trading down to new, two-week
lows after pulling back by more than half percent on Wednesday,
INTC actually has been under the sway of sellers for most of the
past week, finishing down for four out of the past six
But traders may want to wait for additional profit-taking in
INTC before wading in on the long side. The stock's short-term edge
is actually a negative as of Wednesday's close. And even with a
one-point ratings upgrade, shares of Intel are trading with
neutral, 6 out of 10, ratings
as of middday Wednesday.
Another story entirely is the plunge in
). SanDisk began selling off after hours on Tuesday, and opened
lower by more than 8% Wednesday morning.
Despite rallying over the previous two days, SNDK had been
moving generally lower since reaching new, two-week highs in late
March. The Wednesday pullback has not only taken the stock back
into technically oversold territory, but sent shares of SNDK below
their 200-day moving average.
SNDK's plunge into bear market territory may invalidate the
stock from consideration for many traders uninterested in buying
stocks below their 200-day moving average. This is not without good
reason. The 200-day moving average is a sound and quantified "line
in the sand" when trading stocks and ETFs, and the fact that
SanDisk doesn't have a higher rating than a neutral, 5 out of 10,
is in part a reflection of the fact that the stock is trading in
bear market territory.
That said, the short-term oversold character of SNDK cannot be
denied. The stock has a short-term, positive edge of more than two
and a half percent, and is trading near the same levels where it
broke out back above its 200-day moving average in mid-October
So if Intel is still too cool and, for some traders, SanDisk too
hot, is there a semiconductor stock that is just right? Traders and
more active investors may want to focus on stocks from this sector
that are not only
into short-term oversold territory (as SanDisk is), but are also
trading well within bull market territory above their 200-day
An example of such a stock is
Advanced Micro Devices
). Trading in bull market territory since late January, shares of
AMD have slipped into a three-week, trading range near multi-month
Pulling back by more than 2%, Advanced Micro Devices has fallen
to new, two-week lows for a second day in a row, and is back at
technically oversold levels. The stock earned a one-point ratings
upgrade to 7 out of 10 midway through Wednesday's session, just
below our "consider buying" category, and a
of almost one percent in the short-term.
Other stocks with comparably strong ratings and positive,
short-term edges in this sector include
(Read our recent coverage of the sector in our
column for Wednesday,
"Micron Tech and the Selling in Semiconductors"
The updated, second edition of
How Markets Really Work: A Quantitative Guide to Stock Market
by Larry Connors and Cesar Alvarez is now available.
to learn more about what's in the new edition and how to get your
is Editor in Chief of TradingMarkets.com