The optimal holding period for the Semiconductor ETF (SMH) runs from October 19th to March 1st, a period that has, so far, returned an incredible 45.3% to traders.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Super Simple Seasonal Portfolio
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The Markets
It appears that average seasonal tendencies for stocks are not aware of NVIDIA and the AI boom. Stocks surged on Thursday with the S&P 500 Index adding over two percent to chart another fresh record closing high, shaking off the weakness that was leaching into the market in recent days. The large-cap benchmark continues to remain supported at its rising 20-day moving average (4965) and an upside gap derived by Thursday’s jump higher between 4983 and 5038 plots another point that traders will use to shoot long-side bets off of in the near-term. The renewal of short-term strength certainly conflicts with the path of the seasonal norm for the back half of February that calls for declines before entering into the tail-end of the best six month timeframe for stocks in March and April. Momentum indicators continue to show negative divergences versus price, highlighting waning buying demand around these highs and lending themselves to a short-term pullback, but these same momentum indicators (RSI and MACD) remain above their middle lines, which is indicative of an intermediate-term bullish trend. The benchmark currently finds itself above the recent short-term consolidation span between 4948 and 5048, the breakout from which presents an initial upside target towards 5148. At some point, we should expect a near-term pullback/digestion of recent strength, a move that would be viewed as a buying opportunity for any sidelined cash to play the ongoing intermediate-term rising path of prices stemming from the October of 2022 lows. This digestive phase may have just been delayed until the weeks ahead when portfolio managers start to rebalance portfolios before quarter-end.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
