Time for a look at the Semiconductor HOLDRs ETF (SMH), which looks to me like it is heading for an upside breakout that will be precipitated by strength in Intel (INTC), Applied Materials (AMAT), Analog Devices (ADI) in the upcoming hours/days.

The SMH appears to have finished a near-term pullback off of last Friday's rally peak at 38.80, and should revisit the 38.80 area very soon, which if hurdled and sustained will be my first clue that the base-like pattern formed since late July is starting to exert increasing upward pressure against key resistance between 38.80 and 39.10. The overall pattern argues for an upside breakout above 39.10 on the way to 40.00-40.50 thereafter.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.