SOXX Bulls, Lose Their Grip

For most of Friday’s session, SOXX bulls looked like they would make it.

Price action pushed up to within 1%, of a new all-time-high.

Levels threatening the A.I. reversal scenario right up until 30-minutes before the close.

Then, the air came out.

The SOXX, closed up for the day, but just under the breakout, shown in the chart below.

Semiconductors SOXX, Daily

Along with closing below resistance (blue line), price action did so on contracting volume.

Volume contraction implies, commitment to higher prices is weak (not advice, not a recommendation).

Sentiment, Volume, Price

That’s the reversal construct being used on this site.

First, the sentiment, then volume, then finally, the price.

Looking at the 5-Year Weekly chart of Nvidia, we can see it playing out in real-time.

Nvidia NVDA, Weekly

The professionals have already left the chat; storm clouds are beginning to appear.

So far, ‘Week 89’ reversal remains intact.

The Danger Point®

From an engineering standpoint, the SOXX, has met the requirements for a Wyckoff up-thrust (not advice, not a recommendation).

First: Price action posted an outside-down reversal (last Thursday), on increased volume and closed below established resistance.

Second: That reversal was then tested (on Friday) and did so, on contracting volume.

Third: MACD, divergences on Weekly and Daily timeframes; although near-term weekly has yet to tick lower but still (diverging) below the highs of this past March.

Intuitively, you can feel that something’s up. The A.I. pump-n-dump set-up may have run its course.

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