Chips Chipping Away

In light of the AMD weakness this morning, along with NVDA pulling back further, semiconductors as a group seem ripe for a long overdue pullback.

The issue for broad market bulls is whether that capital, from the chips, can flow to other sectors which have been craving rotations, such as retail and energy. If so, then a pullback in the SMH, ETF for the chips, may not be bearish at all and, in fact, could easily set up a fresh, lower risk long entry into the spring months. 

Taking things one step at a time, though, leads us to note that the SMH daily chart, below, is seeing price chip away at that 20-day moving average (orange line) one too many times. Combining that analysis with underlying components, bears would be remiss not to at least gain the upper hand here for a few days. 

Still, the rotation threat is present, looking at some energy names kicking it into gear this morning. I am more interested in those rotations than broad market top-calling at the moment.