Chart of the Day - Wednesday, September 11, 2024

Chart of the Day

🏆 Today’s Chart of the Day was shared by @AndrewThrasher.
 

• After a solid intraday reversal, the S&P 500 printed a bullish engulfing candle today. The largest industry group, Semiconductors ($SMH), led the rally, with $SMH gaining +5.2% and its top component, $NVDA, rising +8.2%. 
   
• Andrew points out that $SMH bounced off its 200-day moving average with conviction. This is the 3rd time it has tested its rising 200-DMA in the past 12 months. Each successful test preserved the uptrend by creating a higher low.
   
• Semis have corrected as much as -25% from their July peak, but a correction was well overdue. $SMH was +45% above its 200-DMA at one point this Summer. The only time it was more extended was in 2003, as it was thrusting off the dot-com lows. 
   

Takeaway: Semiconductors saved the day, with $SMH launching off its 200-day moving average. Semis are the largest and most important area of the market. They led us into this bull market, and they can lead us out just as fast. While $SMH has corrected sharply since July, the uptrend remains intact.