Securities Research Services

Monday, February 26, 2007

Prices a Bit Sluggish

The focus continued to be on the semiconductor sector on Friday as the broader market endured a second day of sluggish action. The SMH did indeed break above the neckline of an inverted head and shoulders pattern, which is theoretically bullish. However, until we see it close firmly above $36, where we believe the real resistance is, we hesitate to get too excited about this sector or tech in general.

Scans over the weekend did not provide us with anything particularly compelling. There were some decent set ups, but decent is not good enough in a market that is going through a sluggish phase. In our opinion, it's better not to push it here, but to wait for something to develop out of this period where buyers seem to be taking a rest.

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