It remains a one horse race among the key Nasdaq industry groups. The Networking iShares (IGN), Software HOLDRS (SWH) and Internet HOLDRS (HHH) are weak and trading near their lows for the year (gray oval). However, the Semiconductor HOLDRS (SMH) are holding up the best and still well above their January low. Strength in semiconductors is certainly positive for the tech sector, but even semis need a little help from their friends.
SMH shows potential, but remains short of a minor or major resistance breakout. The big pattern at work is an inverse head-and-shoulders. These are potentially bullish patterns that require confirmation with a neckline breakout, preferably on high volume. Also notice that SMH is consolidating at the 62% retracement mark (magenta trendlines). A consolidation breakout would be the early bull signal and further strength above 35 would confirm the inverse head-and-shoulders. Moves like these would no doubt help the tech sector, the Nasdaq and the S&P 500.
