(By Rich Bieglmeier) Now that Ben Bernanke has acted, or failed to based on your perspective, investors should review what worked and what didn't immediately following the Fed's decisions.
iStock scanned through Wednesday's best performing exchange traded funds to see if we could find any trends. If multiple ETFs of the same or similar themes maneuvered to the top of the day's performance leader-board, perhaps it's where the institutions believe money will be made in light of a longer twist.
Two semiconductor ETFs managed to find their way into the day's top five gainers for funds that traded more than 50,000 shares.
Forty percent of the top five, iStock calls that confirmation. The winners, iShares PHLX SOX Semiconductor Sector
(SOXX), and Market Vectors Semiconductor ETF
(SMH) added 0.88% and 0.74% for the day, respectively.
Obviously, both ETFs charts are similar looking as each has rallied to its 50-day averages give or take a dime, their MACD lines are aggressively pursuing positive territory, relative strength is on the rise, and the short-term moving averages are on the verge of bullish crossovers. The mix could be enough to push the funds through their 50-day marks with some oomph.
Investors could invest in either semiconductor ETF to profit if the emerging trend continues its flow, or identify the best performing holdings the pair has in common. Why hold the laggards if you latch onto the leaders?
We found six constituents that SOXX and SMH both own that outperformed their peers and the ETFs on the day. They include:
Advanced Micro Devices, Inc.
)Applied Materials Inc.
)Avago Technologies Limited
)Lam Research Corporation
)Texas Instruments Inc.
With the exceptions of CREE and TXN, the other four names all traded more shares than usual, with AMD and AMAT posting top 10 volume days for 2012. You could build your own, personal semiconductor ETF by buying an equal or market weighted amount of the six names.
Alternatively, investors could add shares of the stock with the best combination of fundamentals and technical traits. Of the four companies with larger than normal activity, iStock believes Advanced Micro Devices (AMD) offers the most compelling mix.
AMD shares have been rundown for the most part since their 2012 peak in March. The stock appears to have solid support between $5.60 and $5.75. So, investors might actually be able to practice the buy low and sell high strategy. As we mentioned already, the recent recovery from pivot lows occurred on better than usual volumes, typically a bullish sign. Advanced Micro's MACD line and relative strength are heading higher, despite the stock's recent struggles; which is generally another positive for the immediate-term price action.
Valuation wise, AMD is cheap relative to other semiconductor stocks. The Intel Corporation
) rival trades at a discounted future P/E ratio, PEG ratio, and price to sales ratio. AMD's P/E and price to sales would have to nearly double, and its PEG ratio needs to rise 42% to come to par.
The catch up could start as early as Thursday. AMD is expected to report earnings after the market closes; although, the company's website points to Thursday, June 19th, a day that doesn't exist in 2012. Since they didn't report on the 19th, Thursday wins by default. A solid quarter and upbeat, forward guidance could jumpstart the stock's ascension, especially considering 15.7% of AMD's float is sold short.