Investors watching closely following earnings from peers

Investors will be closely watching NXP’s earnings on Monday after some of its peers have already reported. Some have performed as expected with expectations maybe too high and caution in the markets as of late has soured sentiment and, as a result, seen some profit-taking regardless of their earnings. NXP’s shares closed the day yesterday at $279.23 a share, we can see the price went on to rally to a high of $296 following the breakout on May 14^th. The previous resistance of $264.21 flipped to support after the breakout, which was later tested across a two week period at the beginning of June heading into early July. However, the likelihood of a re-test is now growing and the earnings may be the catalyst here for another test or consolidation. A move below the previous breakout level would likely lead to more profit-taking across the sector, dragging semis down. This may see the price of NXP retrace to around $245-$250, implying a 10-12% move. On the other hand, if there is consolidation around the resistance-to-support flip zone, a move back to ATHs then cannot be ruled out. The technical indicators certainly point to a fading momentum, the MACD is now curving lower with a possible bearish divergence on the daily timeframe. The RSI is also now in a neutral position.