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I bought call options in SMH today because I think the SMH might pop next week yielding some short term profit.

1. The charts.

Now the weekly SMH chart:

If we get back to the $40 highs I’ll be ecstatic, but I’m only looking for a $1 move higher for right now.

2. I noticed some decent buying in the Oct 40 call options.

3. As usual Brian has some analysis on the SMH on it being “range bound.”

I like the fact that the SMH/Semis have been trading sideways. Its been a momentum/China/emerging markets driven two weeks. I think we some sector rotation come into play now. The Semi’s have not participated and bears are still holding onto the thought that the rally won’t go unless the semi’s start up. Well bears, that might happen in the coming weeks so enjoy.

Now we need to look at how the components of the SMH are currently performing.

Top 10 holdings for SMH are:

1. TXN – Leading SMH component also has the best looking daily and weekly chart go figure. Looking very good.
2. INTC – Might have had erroneous data spike today, but INTC is setup on the daily chart to make a new high. Mini cup and handle formation. Weekly chart and daily look stellar. Not shocking at all.
3. AMAT – Daily looks like shit, while the weekly is deceptively improving. All in all not that great.
4. ADI – Weekly chart converging, with the 50 crossing up through the 90ma. Trendline across the top of the weekly bars going back to the May highs. ADI is also resting at the 38% fibo made from the Aug 2006 lows to the May 2007 highs.
5. LLTC – Watch for a break above 35. Again similar weekly convergence as ADI.
6. NSM – Both daily and weekly look really good. Similar weekly convergence – is this a pattern shaping up or what? Could make a case for a massive cup and handle on the weekly chart.
7. MXIM – Getting swapped out of S&P 500 index. I don’t want to act like I’m bullish on this piece of crap, but the stock has been selling off now since 2005. Baked in news anyone?
8. KLAC – Klickity KLAC, don’t talk back. Daily chart has KLAC resting on its 200dma. Same weekly chart convergence of ma’s.
9. XLNX – Same weekly stuff mentioned above. Trend looks ok with others aside from MXIM. Daily resting on the 200. Wow (sarcastic surprise) same patterns are across many of these Semis. Cup and handley daily chart.
10. ALTR – Daily range bound (same as SMH), but weekly trend is definitely up. Same convergence as mentioned before. Trend is up, and stochastics bottoming. ALTR looks good here.