Hi Bull, thanks for posting that eclectic set of charts and thoughts. I think you probably have a pretty good idea of what I feel is to come as well as FA's take on things. He and I are pretty much on the same page. If we take a hit the chips will most likely lead the way. I see your conundrum with the SMH as it is currently sitting at a key support level, but if that gives.....
If we do a Fib measurement from the high of 45.78 to the low of 27.78 the retrace high to 34.95 is a perfect 38.2% Fib.
Sticking with that theme, if we were to trace out that 34.95 retrace high to that 27.78 low we are currently sitting right at 61.8% Fib retrace. Past support Aug'04 and all the way back to Jun'03. There is also a small static shelf of support from Sept-Oct'04.
While all of which I have mentioned I am sure you are perfectly aware, let's now look at fundamentals. The market is in a decline and the general climate is that of uncertainty. The chip sector has been warning heavily this season, even QCOM has given a slowdown outlook for the first Qtr and when they warn something is certainly amiss. Then if that were not enough SEMI sees a slowdown for 2005.
Put it all together and my conclusion is that SMH revisits 27.78 at a minimum sometime in the near future... JMMO
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