Watch for a 4th. Quarter Semiconductor rally. Here is why ...
The past 4 years have seen a Semiconductor rally every 4th. quarter. Will there be another Semiconductor stock rally between now and the end of the year?
Since 2003, the Semiconductor Index (Symbol: SOX) has had a rally every 4th quarter.
Today, I will show you each of those rallies going back to 2003, and then show you where we are currently as we start this year's 4th. quarter. In this analysis, we will first look at the October to December periods for the past 4 years.
Let's start by looking at the October to December periods for 2003 and 2004 on the first chart below.
I placed a vertical line at the beginning October and another at the end of December so that you can easily see those 4th. quarters. You can see on this chart, that both years had a nice rally during those periods.
In this second chart, we will look at the October to December periods for 2005 and 2006.
Note that the Semiconductor Index also had good 4th. quarter rallies during those two years.
So, this shows that the Semiconductors have had good rallies for 4 years in a row during the last quarter of each year.
There is a difference between the 2003-2004 periods and the 2005-2006 periods however.
As you can see in this 2005-2006 chart, the Semiconductor rallies didn't get off the ground until November ... a month later than the two previous years.
That takes us to this year. In the chart below, we show last year's 4th. quarter, and where we are now, as we start the 4th. quarter.
Clearly, we haven't started a 4th. quarter Semiconductor rally yet. As we look at the chart, you can see upper and lower channel lines drawn on the chart. We are about three quarters away from the upper channel's resistance now.
Also, the Semiconductors have been following an up trend since August of 2006 as seen by the red support line.
Investing idea: Keep an eye on the Semiconductor stocks and look for a new upside rally to develop as it has in the past 4 years. If we are going to have a rally again this year, it is more likely that it will start at the end of October or the beginning of November.
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