Distribution On The Way Down

If we’ve reversed from the top on the AI roadshow, expect the ‘easy money’ hype, to increase as price action heads lower.

It should be all too familiar; it’s a buying opportunity, the consumer is strong, the economy is strong … so, it goes.

The new, young, or uninformed ‘investor’, continues to average down, believing the hype; whatever’s happening to the downside, is just temporary.

Eventually, those participants start to sell.

Selling slowly at first, but then gathering steam. Those incorrectly positioned, provide the fuel for more downside.

With that, let’s go to the leveraged inverse fund SOXS.

Semiconductors, Leveraged Inverse SOXS, Daily

The chart is self-explanatory.

Hard Stop (definite exit) at the prior session low of SOXS 8.89. Soft Stop (trader discretion) at today’s session low of SOXS 9.21 (not advice, not a recommendation).

Next up, and depending on price action, we’ll discuss a potential trading channel.

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.

The Danger Point®, trade mark: No. 6,505,279