Earlier I discussed the most important chart in the market.  Now let’s look at the most interesting chart.

It’s the Semiconductors Index.

Coming into the year it was a pretty clear potential head and shoulders top setup.  Amazingly, it just never quite broke down.  Now semi’s are at the top of a 9 month range.

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Two important factors to watch include the rising 200 week moving average and the RSI index on the bottom of the chart.  It’d be very bullish if RSI can break the late 2015 high.  For now, it appears rangebound.

Next, let’s zoom out on this chart to a 16 year timeframe.

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We see that neckline area is also the major high area of the mid 2000s.  Old resistance has become new support.  Between that and the rising 200 week moving average, the bottom of the range, ~560, is incredibly important and heavily supported.  We also see the relative strength downtrend from the 2010 peak is intact.

Wrapping up, this is likely a morphing topping pattern.  This could be a very bullish piece of technical evidence in the coming months.  However, for now we have a rangebound group of stocks.  We need to respect the range until it’s broken.