One of the most recent market leading groups has been the semiconductors sector. Since the March, 2009 low the technology heavy NASDAQ composite has rallied 100 percent. The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ) which tracks the NASDAQ 100 traded as low as 25.05 in March, 2009 and hit a recent high of 50.19 on April 15th, 2010. This is a tremendous move higher in just over one year.

When traders follow the technology space they will often look to see if the semiconductors are leading the way higher or lower. Often when the semiconductors are strong it is signaling strength in the tech sector. When the semiconductors are lagging the NASDAQ index, it will generally signal that the index may not be as strong as it appears on the surface. Therefore, the leading semiconductors should be followed closely.

The first and most important semiconductor stock that should be watched closely is Intel Corporation (NASDAQ:INTC) . Intel designs and produces chips for just about everything conceivable in technology. The company is known as the leader of the pack and as a good barometer for the semiconductor group, as well as the NASDAQ index. Intel Corporation (NASDAQ:INTC) released earnings a few days ago and has pulled back slightly since that time. The stock still is in very good technical shape on the charts trading near its 52 week high. The daily resistance level for Intel Corp is 25.00 – 25.50. The daily support levels for Intel Corp are 23.00 – 22.75.

The next important semiconductor stock that should be watched closely is QUALCOMM, Inc. (NASDAQ:QCOM). This stock is a leading name in the mobile technology space and has been a leading stock since the 1990’s. Qualcomm Inc made a high in early January at nearly 50.00 a share and has not traded back to that level as of this time. However, the stock is sharply off its March 2010 low of 36.46. The current daily chart pattern looks to be a sideways base which is slightly bullish. The stock will have daily resistance at 44.00 and 45.50. The stock will have good support on the daily chart at 40.00 and 38.50.

At this time the two market leading semiconductor stocks look just fine on the charts. They both have potential for a little more upside. However, should these stocks decline sharply on volume it could indicate weakness in the entire tech sector as well as the semiconductor group.

Nicholas Santiago
Chief Market Strategist