Yesterday, on March 18th, the U.S. stock market gained value on big trading volume after an «unexpected» report on the Fed’s monetary policy that followed the 2-day FOMC meeting.
The hi-tech stock index, which is NASDAQ, gained 0,9%, thereby closing at 4982,71. This is close to the major high of 5000, which was hit for the first time in 15 years on mArch 2nd, 2015. At the same time, the broad market index - S&P500 - gained 1,2% over the same reporting period.
The downward pressure on the U.S. Dollar coupled with the support gained by American stock markets has a lot to do with the interest rate prospects for 2015-2017. The thing is that the U.S. economic projections were downgraded along with the fact that Janet Yellen and the Fed signaled low probability of interest rate hikes in April.
The following stock market sectors set new highs following the Fed’s report: healthcare, hi—tech, retail sales. Still, Masterforex-V Academy experts assume that the stock market rally is still in jeopardy due to excessively big amount of trading days that witnessed distribution along with sellouts on high trading volume.
Computer chip manufacturers are still seeing their stock rallying despite high volatility. According to the Option Trading Department of Masterforex-V Academy analyzed 3 leading hi-tech stocks traded on NASDAQ:
Skyworks Solutions (NASDAQ: SWKS ) was added to S&P500 last week. Apple (NASDAQ: AAPL ) is the company’s major client. Skyworks’ stock has been setting new high s 5 weeks in a row. Yesterday. the price closed at $97,12 per share!
Qorvo (NASDAQ: QRVO). The company manufactures chips for commercial and military use. By the way, it has the highest IBD rating of 99, with the annual income growth of 20%. The annual income-per-share growth is 278%! It is interesting to note that the company has been seeing income-per-share growth for 9 carters in a row. At the same time, Qorvo chips are being widely used for building 4G networks in China at the moment.
Breaking the 78,00 area on coming out of the consolidation range was accompanied by a trading volume insufficient to call it a full-grown move out of the base. In order for us to witness a true breakout, the trading volume needs to grow up to 40-50% of the mid-term volume. the very area can be used to enter a long trade with the take profit level of +20% off the entry point provided that the bull market is still there with all the U.S. stock indexes.
Semiconductor (NYSE: TSM ). The stock is probably completing the tech base with a possible buy range close to 25,00. Investors already go a chance to buy good after the price rebounded from the 50-day MA. After closing at 24,71 yesterday, the price is currently staying 2,41% away from the 25,32 high. If the price fails to retrace 15% or more off the high set on Feb 25th, we are likely to end up getting a «flat base», which is a pattern usually followed by a true breakout on high volume. If this is the case, and the trade is triggered, we recommend seeing the stop-loss at 7-8% off the entry point.
