It’s the beginning of the second quarter, and the market already has gotten off to a nice start. We’ve come off of our 50-day moving average (blue line) nicely here, as depicted in the chart of the Total Market VIPERs (VTI) seen below.
I suspect that either the Dow or the S&P 500 or perhaps even both of these broad market indexes will hit new highs as we lurch into the rest of July.
What happens after that, of course, is anyone’s guess. I think if bond yields settle down and/or if we can get some stable, i.e., tame inflation data going forward, it could set the stage for more of what we’ve already seen this year — a lot of green arrows on those trading screens.
One sector of the market that I really think is going to continue making those trading screens green is semiconductors. The sector was beaten down throughout most of last year. From about August 2006 to April 2007, the space traded basically sideways.
Since April, however, we’ve seen a big surge in the value of semiconductor stocks. This surge was so significant that it prompted us to take a position in semis in my ETF Trader advisory service.
I am looking for more upside ahead in the semiconductor sector. Indeed, the Semiconductor Holders (SMH) ETF now is trading right at its 52-week high.