The market remains in a correction, with major market indexes ending the week at lower lows. The NASDAQ Composite Index is now undercutting its early October low and is in free fall while the S&P 500 undercuts its early December low and the 200-day moving average. The S&P's break below the 200-day moving average on Friday was the first since the pandemic started. Volume was heavy due to options expiration.
Semiconductor short-sale targets that we have reported on over the past two weeks all triggered short-sale entries during the week as the indexes came down, but not without a lot of screwy volatility. Semiconductor equipment makers Applied Materials (AMAT), KLA Corp. (KLAC), and Lam Research (LRCX) all correlate very closely. Thus it is not surprising to see that all three triggered short-sale entries as they busted their 50-day moving averages on Wednesday in nearly identical moves. AMAT and KLAC had already closed below the 50-day lines on Tuesday after triggering early short-sale entry triggers at their 20-demas on the same day. Both AMAT and LRCX also broke below their 200-day moving averages on Friday, triggering fresh short-sale entreis using the 200-day line as a covering guide. Meanwhile, 5G semiconductor leader Qualcomm (QCOM) also triggered a short-sale entry along its 50-day line on Wednesday, but as noted in our prior reports, we were looking for a break below the 20-day exponential moving average as an initial short-sale entry trigger. A short-sale entry trigger at both the 20-dema and then the 50-dma occurred on the same day this past Tuesday, and QCOM has split wide open from there.
Our message remains as it was last week: unless you are shorting this market, cash is king.The Market Direction Model (MDM) remains on a CASH signal.