The amount of big name companies reporting quarterly earnings
is heating up as both tech and financial leaders released reports
in the last 24 hours.
After the bell on Tuesday, semiconductor giant Intel (NASDAQ:
) reported earnings that were mixed.
On Wednesday morning three large financial stocks, Bank of
), U.S. Bancorp (NYSE:
), and PNC Financial Services (NYSE:
) all beat estimates, but investors were not overly bullish.
The Market Vectors Semiconductor ETF (NYSE:
) is a basket of 25 chip stocks with a large portion of the
allocation in the top holding, Intel.
The largest semiconductor stock in the U.S. makes up 18
percent of the portfolio and therefore a big move on earnings
will have a direct effect on SMH. The initial reaction to Intel
earnings was positive with the stock trading at the best level in
How ETNs Differ From ETFs
However, SMH is lower by one percent as the other stocks that
make up the top ten were moving in the opposite direction to
Intel. The ETF is now down five percent from a decade high set in
early April, but it is holding support at moving into oversold
If Intel can hold onto its breakout it could be enough to help
SMH bounce off support, making the current selling a buying
The iShares U.S. Regional Banks Index ETF (NYSE:
) pulled back over six percent from a six year high over the last
few weeks before finding support and bouncing again on
The top two holdings, U.S. Bancorp and PNC, reported decent
earnings on Wednesday morning. But, the two stocks are moving in
opposite directions with U.S. Bancorp turning lower after opening
higher and PNC holding onto the early gains.
The chart of IAT shows a pattern of higher highs and higher
lows over the last year and the most recent pullback holds true
to the trend. Depending on how investors react to the earnings
from the top two holdings in the coming days, the ETF could be
setting up for a great buying opportunity.
The ETF is extremely oversold and could be ripe for value
investors on the recent pullback.
Based on the pattern of both SMH and IAT over the last couple
of years and the earnings that have been reported so far it
appears both ETFs are either at or near buy zones.
The key is to have a plan in place in the event the ETFs do
not hold support and break the current uptrends.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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