Within the global technology sector, semiconductor, or chip stocks as they are sometimes referred to, have been some of the best performers over the last 24 months, benefiting from the focus on long term trends in such as Autonomous Cars and Artificial Intelligence.
While the long term fundamental trends remain broadly positive, the short term price action is signaling profit-taking and a reversal from all-time highs, as can be seen in the iShares PHLX Semiconductor ETF.
To participate in the pullback, traders could look to trade the Direxion Daily Semiconductor Bear 3x Shares ETF, which is an inverse ETF, taking advantage of any downward price movement of semiconductor shares.
Technically, the price has made a bullish reversal after a long term downward trend. This was accompanied by the RSI that signaled bullish divergence. Additionally, the 50-day moving average is starting to lose downside momentum signalling that we may be finding a short term bottom.
At current levels (or better) traders could look to take a buy/long position in anticipation of a short term rebound.
Buy SOXS between $11.00/$11.70
Take Profit: $14.80 & $16.50