Morning Comment: Texas Instruments Could Fuel A Breakout In The Chip Stocks

The following is a light version of Beyond The Fundementals Now, a daily newsletter from leading technical analyst and CNBC contributor, Matt Maley. Click here to access more detailed analysis.

Pretty uneventful Monday

The stock market saw a mild rally yesterday on very low volume and breadth that was flat. Of course, we will certainly continue to see some big earnings-related moves on individual stocks going forward (just like we see every earnings season), but it looks like investors are waiting to see what the Fed announcement gives us next week before they derive a strong opinion on the entire market.

The SMH semiconductor ETF is testing a critical resistance level

Have said this, there IS something else that has the potential to push the broad market higher before next week: A breakout in the chip stocks. The SMH is testing a very tough resistance level, so any upside follow-through will be quite bullish for both the group and the broad stock market. Click here to get more details (and charts) on this critically important potential development in my newsletter, Beyond the Fundamentals Now (BTFNow.com).

TXN to play a key role this week

The problem is that there is no guarantee that the SMH will indeed break above its key technical level due to the fact that it is getting quite overbought. Whether it can indeed breakout or not, could be determined by the action in Texas Instruments TXN over the rest of this week (after it reports its earnings tonight). Of course, TXN is not the only important stock in the chip sector. In fact, I'll be watching two other stocks in particular over the coming weeks, but the focus this week should be TXN. To delve deeper into these issues, including the headwinds facing the SMH, the chart on TXN, and the other stocks/charts we're watching in the chip sector, click here to subscribe to "Beyond the Fundamentals Now" (BTFNow.com).