Semiconductor Party

Texas Instruments ($TXN) has agreed to buy National Semiconductor ($NSM) for about $6.5 billion - a 78% premium to yesterday's close (Bloomberg)

Let's get right down to business and break down the Semi's:

$SMH is the Semiconductor Holders Exchange Traded Fund. It owns the companies that make the Chips for our electronics: Intel ($INTC), Broadcom ($BRCM), Applied Materials ($AMAT), etc.

Over the last couple of days these chip stocks had been under-performing and some of these looked like they were falling off a cliff (I'm talking to you Intel).

This morning, all of these names are bidding a little higher in the pre-market due to the M&A. The question is whether or not $SMH can clear resistance and follow through. As you can see in the chart above - the Semi's failed to get above that key $35.00 level last week. This area marks trouble because it was January Resistance that became February Support and now overhead Resistance once again. We find the 50 day Moving Average chilling out right here also.

The Bid/Ask this morning is 34.50 x 34.55.  If $SMH can catch $35 today and hold it this week, we should see new highs in the space. This would be great for the Nasdaq as Semi's are a leading indicator for the Tech-heavy index.

And anything good for the Nasdaq is good for our portfolios.

See Also:

Technical Stars Line Up (High Chart Patterns Blog)