Sector Investing

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Amateur Investors Weekend Stock Market Analysis:

http://www.amateur-investors.com/Weekend_Market_Analysis_July_8_06.htm

SNIP: As talked about in the past future movement in the Nasdaq will likely depend on what the Semiconductor sector does. A longer term chart of the Semiconductor Index (SOX) shows it completed a bearish Double Top pattern in early January after encountering resistance at its previous high made in early 2004 near 560 (point E). If the SOX is unable to hold support at the low made in October of 2005 near 420 and continues its downward trend then it may eventually drop back to 350 to 380 range.



The 380 level (point F) is very close to the SOX's 50% Retracement Level (calculated from the September 2002 low to the highs made in the early part of 2004 and 2006) while the 350 level (point G) is near the SOX's 61.8% Retracement Level. If the SOX does eventually drop back to the 350 to 380 range at some point then Nasdaq will likely continue downward as well.