The ‘AI’ Top

We’re about to find out if last Tuesday, was the top in AI, or just another interim top on the way higher.

No matter the Taiwan Semi slow-down, mainstream media’s not even considering we’re near (or past) a potential long-term reversal.

For this update, the SOXX is being used as proxy for the AI mania. The chief cook and bottle washer in this latest delusion is Nvidia (NVDA), which reached a high on Friday, July 14th.

Basic Indicators, Wyckoff & The Cat

Even without using Wyckoff analysis, basic indicators like MACD, both on daily and weekly are telling us the momentum has slowed; on the daily, it’s outright reversed to the downside.

From a Wyckoff standpoint, we’ve had an up-thrust (reversal) that’s been supported by decreasing up-volume and increasing down-volume (shown on daily, below).

The cat’s out of the bag with Taiwan’s earnings release.

What we have are delays, more delays, coupled with revenue slowdowns (not advice, not a recommendation).

So, NVDA, where’s the money? Where’s that $11-Billion?

Slow, At-First?

If we’re past the top, it could be slow at first. Maybe imperceptible that a significant reversal is at hand.

If that’s the case, it might all change on August 23rd, when NVDA releases its own earnings.

Semiconductors, SOXX, Daily

The daily chart shows we’re holding below resistance (blue line) after an apparent reversal.

The probabilities are accumulating that we’re in some kind of sustainable reversal.

Next week is likely to show us if that assessment is correct (not advice, not a recommendation).

Positioning

Stated previously, this site does not provide advice.

With that said, here’s how it looks on the company’s spreadsheet for shorting the SOXX using leveraged inverse fund SOXS.

Next week’s action is likely to either force an exit of the position or allow for the trailing stop to be increased.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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