Interesting Semiconductors Industry in a Weak Market

The S&P 500 is going to continue moving sideways until a powerful catalyst forces it into a direction. As I mentioned last week, it will keep oscillating between 3,800 and 4,150 until there's a clear winner between Bulls and Bears (black dotted lines).

S&P 500, daily chart, you can click on the image in order to magnify it

The scenario isn't very encouraging, the S&P 500 is composed of the biggest large-cap companies traded in the USA. Reviewing the S&P 400 (mid-cap) and S&P 600 (small-cap) indexes, during the last decline, those two indexes suffered a lot more than the S&P 500. They are both moving around the -3 Keltner Channel (KC) while the S&P 500 is oscillating around the +1 and -1 KCs. The money isn't flowing to the riskier assets.

Trading Opportunities

The current Market situation is dominated by uncertainty, and the Bulls haven't been able to create sustainable rallies since 2021. It's time to monitor the Market Industries in order to identify the ones that could lead the way into a new powerful multi-month Bull Market. Out of the 68 Industries that compose the GICS (Global Industry Classification Standard) I have identified 7 that have some potential.

GICS Industries with potential to rally, you can click on the image in order magnify it

During the trading week of Mar/27 I'll be monitoring 24 tickers. If any of them has a breakout with enough volume, I'll open a pilot trade on the long side. With the amount of selling pressure we experienced during the last trading week, I don't have high expectations of any trade at this point. My trades will have a small size and a very tight stop placed at around 5% of my entry point.

Companies that I'll be monitoring during the trading week of Mar/27, you can click on the image in order magnify it

The Semiconductors Industry is the one where I found the highest number of good setups for my trading plan. It comes with some risk, the weekly chart shows that the Industry is getting to overbought levels and it matches an area with a lot of volume that will act as a resistance.

$SP1500#453010, weekly chart of Semiconductors Industry, you can click on the image in order to magnify it

Summary

The Bulls have consistently failed to produce a sustainable rally since 2021. While we get more evidence that the Market situation has changed, there are very few high-quality opportunities to trade on the long side. If you can't find attractive setups to trade just wait. It's a time to exercise patience. It might take a week, a month or a year, but eventually the opportunities will come.