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Many industry sectors have been moving in sync with the major indices in recent weeks, but the Semiconductor Index ($SOX) has been showing major relative weakness. The S&P 500 Index has only retraced approximately 50% of its range from the July low to August high, but the $SOX has already fallen all the way below its July 2010 low, and is nearing its February 2010 low. Therefore, if the broad market is unable to stage a meaningful bounce in the coming days, the semiconductor ETFs may break down below major levels of support, creating potential short sale entry points. The ProShares UltraShort Semiconductor (SSG) is an inversely correlated “short ETF” that is setting up for buy entry, and will trigger if weakness continues in the $SOX.

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