Bulls Look to Trap Bears – Semis the Key
The bulls had the chance. They could have really squeezed the bears. But they weren’t totally ready just yet. Tuesday’s afternoon selloff looked on the ugly side, but in reality it just kept the stock market in the same range it has been in all month. I want to see a daily close in the Dow above 26,500, S&P 500 above 2945 and NASDAQ 100 above 7800 to confirm the bull are readying a run to the old highs. These levels are not that far away. Although I sound like a broken record and my thesis may end up being broken, I remain firm that this range and the pullback will ultimately resolve itself to the upside this year with Dow 28,000 up next.
For a while I have written about my “barbell” approach to stocks, weighting some aggressive sectors with defensive ones. In this case, as you know, I have loved the semis along with utilities, REITs and staples. Right now, I am not really interested in the middle. While semis can sometimes be at the mercy of the overnight tweet regarding tariffs, they are more and more immune, especially on a relative basis with each successive scare. Fresh all-time highs are my target.
You can see the chart below and it looks a whole lot better than the pundits and media would have you believe.
