Replies to post #7694 on Sector Investing

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SMH versus the NASDAQ over the last six years. As you can see from the charts below the SMH has been underperforming the NASDAQ for years. How often has the NASDAQ divergence then lifted the SMH? Not often enough as the SMH has tremendously underperformed the NASDAQ. This is the worst short term divergence yet. Note the number of times NASDAQ has fallen after previous divergences over the last few years. The SMH may have to test an RSI (14) of 30 on the weekly chart before the market bottoms. Or not???



The weekly chart shows two trips to a weekly RSI of 30 since 2004.



These kinds of sell offs usually happen during the summer not the best months of the year November through the end of April.

http://www.chartoftheday.com/20071026.htm?T

Think the NASDAQ will pull the SMH up now instead of the SMH pulling down the NASDAQ?

Sentiment is not supportive to an uninterupted rise in the market. The Investors Intelligence Poll is still overly bullish:

http://www.schaeffersresearch.com/streetools/market_tools/inv_intel.aspx?click=jumpto

The CPC is still neutral as best.