Continuing our discussion of money possibly flowing into the Taiwan Index Fund (ETW), let's take a look at what drives the Taiwan market: semiconductor stocks.  Notice that the EWT has thrust just above critical 6-month resistance, which my work argues shold be hurdled, and which then should trigger upside acceleration in the semis towards the next immediate target zone of 40.50, and then 42.50 thereafter.  At this juncture, only a sudden downside reversal and plunge in the SMH that breaks the prior pivot low at 36.50 will wreck the pattern completely.  Stocks in the SMH that exhibits very favorable chart patterns that could mimic the SMH are INTC, TXN, AMAT and NSM.

Mike Paulenoff is a 25-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his E-mini S&P and QQQQ technical analysis and trading alerts. For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary, or try his QQQ Trading Diary.