Equity Risk
Adding to yesterday’s chart, here’s another one, link here.
Let’s also include this chart.
A few months ago, equity risk was zero, link here.
Today, as the chart in the second link above shows, it’s gone negative.
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The Danger Point®, trade mark: No. 6,505,279
Once The Trend Was Broken
During the internet bubble of the 2000s, after the trend break in the QQQs, price action immediately began its long (multi-year) descent.
Naturally, it would follow when comparing that bubble, with the A.I. bubble, as was done here, one would have thought once the trend is broken, down we go.
Not so, today.
Instead, we have depending on how it’s measured, at least ten-weeks (so far), testing of that break.
Is it all about to change? Are we at ‘tests’ end?
Semiconductors SOXX, Daily Close
The most recent update showing the ‘trend break’ as discussed above, is here.
The chart below, presents a possible ‘last gasp’ for the SOXX (not advice, not a recommendation).
From a Wyckoff analysis standpoint, the market ‘by its own action’, has told us the axis line above, is important.
If the chart is correct and we’ve had a false breakout (Wyckoff Up-Thrust), the expectation is for downside follow-through (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Bubbles, Side-by-Side
Here’s something a little different.
Two trend breaks are shown side-by-side.
Without looking at prior updates, which chart is the internet (QQQ) bubble break and which chart is the A.I. (SOXX), bubble break?
We’ll cue the Jeopardy music while you pick. 🙂
And now, for the reveal
Internet Bubble QQQ, Weekly
The chart segment on the right, is the internet bubble of the 2000s.
There’s no ‘rest of the story’ with the SOXX.
That story has yet to happen (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Testing The Underside
After the ‘test’, is that when the plug is pulled?
It’s the market’s job to frustrate (nearly) every single participant, bull or bear, into submission, into giving up and exiting just before the real move gets underway.
How many times have you heard (or experienced) the following:
“The market stopped me out, then took off for a huge gain … without me”.
Experience (i.e. many losses) is the ability to know when the trade (premise) is broken or just going through a test. 🙂
Looking at the SOXX, it’s a compelling (test) picture (not advice, not a recommendation).
Semiconductors SOXX, Weekly
Prior updates (here and here) have shown the similarities of the A.I. bubble to the dot-com bubble of the 2000s.
One of the events watched for, was the ‘trend break’.
As of today, the market is currently testing that break.
The fact we have a new weekly (retrace) high as well, presents a Fibonacci time correlation.
This week is Fibonacci 21-weeks from the all-time-high in the SOXX.
A downside reversal from this point may indeed tell us, ‘The plug has been pulled’ (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
The Path, of Bubbles Past
We’re getting very close to the SOXX, trend break discussed in this update.
If that’s the case and there’s a breakdown, the SOXX, joins the list of past manias and market bubbles (not advice, not a recommendation).
Other markets are hovering near all-time highs, giving the (false) impression, all is well.
Updated In Real-Time
Those monitoring this site have watched in real-time, how this market was selected for (short) positioning and when it was selected.
The only thing not discussed, was the management decision to maintain the position through the ‘election’ blip which at this time, has been fully retraced and more.
It’s a failed (up) move.
Nothing gets the Street’s attention more than a failed breakout or breakdown. The opposing side is trapped (not advice, not a recommendation).
Anything Can Happen
As David Weis used to say, ‘anything can happen’.
There has been no trend break, yet.
As of this post (10:50 a.m., EST), the SOXX, is hovering at support, threatening to break lower.
Charts to follow.
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The Danger Point®, trade mark: No. 6,505,279
‘The Big Money’s in, The Big Move’ … Dr. Elder
The whole quote from Elder (paraphrasing):
‘The big money is in the big move but only the top-tier trader or speculator has the ability and skill to trade it…’
This ‘big money’ idea is exactly what Jesse Livermore figured out as part of his plan after years of making ‘piking bets’ on minor price fluctuations.
Ultimately, his method was to anticipate events about to happen in a ‘big way’.
He netted over $1 million, during the Panic of 1907, probably his best example of trading the big move.
Note: $1-mil, in 1907, is about $32-mil, today.
Here’s a chart of the ‘Panic‘.
Look how similar it is, to the chart of the QQQ bubble and the current position of the SOXX; except the (potential) wipe-out, of course. 🙂
Back at the 2000, bubble top in the Qs, we have the following.
Nasdaq QQQ, Weekly
Several trading channels can be identified; the most aggressive, is the one shown.
The channel above, lasted nearly three-months, from week-ending 1/26/01, to week-ending 4/6/01.
Note that price action rose for about three weeks in a ‘January Effect’ at the beginning of ’01, before rolling over in a big way.
There’s a lot going on in this chart. For example, the January effect rise took the Qs back to a Fibonacci 23.6%, retrace of the entire down move.
Strategy
The coming days and weeks are going to let us know if the SOXX, is modeling the mania bubbles of the past (not advice, not a recommendation).
A possible important distinction: In the prior update, the SOXX, had two massive down-thrusts, not just one.
One could even argue there were three (week ending 7/19/24).
Does that mean we’re at an order of magnitude larger on what comes next?
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The Danger Point®, trade mark: No. 6,505,279
Similar Pattern … So Far
Two charts are presented below.
First, the Nasdaq bubble of the 2000s.
Then, the A.I. bubble in semiconductors, the SOXX.
Nasdaq QQQ, Weekly
Massive downward thrust indicated the mania was over.
The bubble in the SOXX, compared to the Qs, looks eerily similar except the trend break is missing (so far).
Semiconductors SOXX, Weekly
Note, in the case of the SOXX, there were two massive down-thrusts.
The second (not highlighted) was Fibonacci 5-Weeks later.
Of course, nothing is known for sure until it’s all over.
However, the charts are similar.
There’s been a lot happening over the past few days.
Those events may have had all the effect they’re going to from an upside perspective (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Top of The Tops?
Here … ‘Hold this bag’.
Having been through the crash of ’87, ’98, ’01, ’08, and now, the feeling is similar.
Each time the vehicle (stock) is different but also the same, at the same time.
In case anyone wants to review, here’s the definition of ‘bag holder‘.
Is Now, The Time?
Previous analysis and potential top identification for NVDA, has been premature.
With that in mind, presented below are two charts.
One has the Fibonacci count from the October ’22 lows; the other, shows a trading channel overlay.
The inference is, we’re close to some kind of ‘event’ whether it be sideways congestion or reversal (not advice, not a recommendation).
Nvidia NVDA, Weekly
It appears, since the October ’22 lows, NVDA is being influenced by a Fibonacci sequence.
The ”close’ chart has the same Fibonacci count as well as the current trading channel.
Next week is ‘Week 88’, stock-split (10 to 1), as well as the Fed meeting.
Week 88, is within the margin of error for a precise Fibonacci count, Week 89.
With NVDA, at the top of its trading range, one needs to be on the lookout for some type of Fed/Stock-Split ‘overshoot’ or other indicator of potential upside limit (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
1907, 1929, 1974, 1987, 2000, 2007, … and Now
As Scott Walters has said:
‘It’s different this time.
It’s Worse!‘
That ‘worse’ part includes the adverse moves in the market.
This time around, as opposed to ’07 – ’08, they really do seem to be worse.
Which, brings us to biotech SPBIO.
Biotech SPBIO, Weekly
Just to remind ourselves where biotech is at the moment, we have the un-marked weekly chart.
This sector’s the only one (miners excluded) that’s trading below the 50-Week and 200 Week Moving Averages with a 50-wk cross to the downside.
On a weekly basis, we’re in a major long-term downtrend that looks to have finished its upside correction.
Getting closer-in on the hourly chart we have the following.
SPBIO, Hourly
What do you see?
Here’s the marked-up version.
Over and again; a fractal set-up called ‘Spring-to-Up-Thrust‘.
The zoom chart below shows that price action appears to be struggling at the resistance area (black line).
Danger Point
At this juncture we’re at The Danger Point®
Enough of a push higher and SPBIO, could continue on upward, overcoming significant technical and fundamental barriers.
However, since we’re trending lower in the longer timeframes, probabilities suggest that downtrend may be ready (or near ready) to re-assert itself.
Stay Tuned
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The Danger Point®, trade mark: No. 6,505,279
The Danger Point® 