Category Archives: Artificial Intelligence

The Signs of The SOXX

August 24, 2024 By in Artificial Intelligence, One Way Pockets, Semiconductors, SOXS, SOXS-24-13, SOXX, ZeroHedge 2 Comments

Has The Plug Been Pulled?

More distribution takes place on the way down, than on the way up.

From the book ‘One Way Pockets’, first published in 1917, analyzing actual client accounts and trading behaviors, we have this (paraphrasing):

‘It was from pullbacks of record high prices, where the most distribution took place’

It’s a psychological, repeatable, phenomenon. We know it today as ‘Buy the dip’.

The problem is, buy the dip doesn’t work when the trend changes from up to down.

All of which brings us to ‘Signs of the SOXX’.

Semiconductors SOXX, Daily Close

“What do you see?”

Marking up the chart, we see the SOXX, is potentially at the confluence of both resistance and trendline.

Another label for the possible ‘contact’ is:

The Danger Point®

This is where the risk of being wrong on a short position is least (not advice, not a recommendation).

With the Fed release taken as ‘good news‘, it’s reasonable to propose all the good news maybe already out.

Who’s left to buy?

The ‘Right’ Answer

If we just saw a test of resistance (solid black line), then there’s only one (or a variation of one) right answer at the next session.

That is, SOXX, price action (by the close) to be either net sideways or down (not advice, not a recommendation).

If that does not happen, and there’s buoyancy in price action, one can conclude there’s (seller) ‘absorption’ taking place at these levels.

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

Oil Bounce … Part II

August 23, 2024 By in Artificial Intelligence, David Weis, DRIP, DRIP-24-02, Federal Reserve, Great Depression 2.0, Interest Rates, IWM, Oil, Oil & Gas, Russell 2000, Semiconductors, SOXS, SOXS-24-13, SOXX, TZA, TZA-24-01, USO, XOP

Is This It?

We’ve gone form “Not Happening” to this morning’s action; ‘maybe it’s happening?’

As was done with Oil & Gas exploration XOP, we’ll now take a look at the oil patch itself and proxy, USO.

Oil tracking Fund, USO, Close

“What do you see?”

Marking up the chart.

We either have the ‘tradable bounce‘, or a potential contact point for the right-side channel line (not advice, not a recommendation).

The Fed announcement is just out, essentially accommodating a rate cut in September.

There was talk of some ‘cooling’ in the market (Ya think?).

With that, demand for oil seems like it would take a hit putting it lightly (not advice, not a recommendation).

Positioning.

The market itself is telling us where to go and what to do.

The important item for the day; what is the market not doing? Specifically, the Semiconductors, SOXX.

The SOXX, has not made a new (daily) high (at least, not yet) after the Fed’s announcement; it can even be seen as the ‘proverbial gut-check’, a la David Weis.

With that, all other positions have been closed save the short in the semiconductors via inverse fund SOXS (not advice, not a recommendation).

Danger Ahead

The ‘rate cut’ has yet to happen and September is a long way away.

It can’t be re-iterated enough how dangerous is this environment; prices stretched via a narrative that’s false (not advice, not a recommendation).

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

Pulling Back … The Curtain

August 22, 2024 By in Artificial Intelligence, Federal Reserve, Interest Rates, Semiconductors, SOXS, SOXS-24-13, SOXX, ZeroHedge

The Truth Comes Out

Here’s a different take on Wall Street’s ‘outrage‘ over a year’s worth of fake jobs data.

No, the outrage is not about the data being fake, the outrage may be the curtain has been pulled back, allowing the public to see the truth.

That truth, discovered by Wyckoff back in 1902, was price action has no connection to so-called economic numbers.

In fact, he said (paraphrasing):

‘Dynamics were operating on prices that had no relation to any fundamentals.’

If market action really was based on fundamentals, an historic revelation of 818,000 fake jobs, would have sent the indexes into a frenzy, which did not happen.

In fact, nothing happened

Now, we have ‘The Street’ putting the pieces back together (trying to re-hypnotize their clientele) and come up with another fake narrative; surely, the Fed will lower rates this time … honest!

Well, let’s leave the clown show (for now) and get back to some real, reality, the A.I. bubble.

Semiconductors SOXX, Daily

What do you see?

If you’re a long-time visitor (welcome back), by now, your market recognition should be near instant.

That is, we have a Head & Shoulders pattern (not advice, not a recommendation).

Nothing is ever perfect in the markets, but this one is near textbook.

Positioning

Shorting this sector is more than a little dangerous.

Just take a look at the gaps, volatility, huge percentage swings up and down, with leveraged inverse fund SOXS.

With that said, and with the danger in mind, a potential low-risk short (via SOXS) was established early this session.

The trade is labeled, SOXS-24-13, with a stop at the day’s low of SOXS 20.63 (not advice, not a recommendation).

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

Correction … or … Crash?

August 2, 2024 By in 1987, Artificial Intelligence, Biotech, Bonds, Corn, Federal Reserve, Gold & Silver, Natural Gas, TLT 1 Comment

1987, Deja Vu

Insane, delusional valuations, high interest rates, no rate cut.

What could go wrong?

Visitors to this site already knew that ‘something’s up’.

Fully documented well in advance of today, was the A.I. bubble reversal, silver reversal, biotech reversal, and commodities like corn and Nat-Gas continuing their sustained decline.

Now the market hysteria is resulting in the typical knee-jerk, ‘flight to safety’ to the bond market (not advice, not a recommendation).

Surely, with all of that, the Fed will cut rates, right?

For the (potential) answer to that question, let’s look at the bond market.

Long Bonds, TLT, Weekly

Already proposed on this site, the Fed does not lead the bond market and interest rates, it follows it (not advice, not a recommendation).

So, what’s this chart telling us?

If the market continues its decline in the coming weeks, TLT price action itself shows a potential for higher bond prices (lower yields).

We’re just over six-weeks away from the next Fed meeting.

Fed Follower?

If the Fed is still a follower, not a leader and if bond (TLT) prices reach the target just as the September meeting is held, then, one would expect a rate cut (not advice, not a recommendation).

Important to note, if TLT gets to the target area, it’s in Wyckoff Up-Thrust (potential reversal) position.

Economic Air-Pocket

If there is a rate cut as a result of the leading action of the bond market and then it reverses to the downside (rates higher), that’s when it would get real interesting.

Correction or crash; we may have to wait until September to find out (not advice, not a recommendation).

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

The A.I. Rope … Just Broke

July 17, 2024 By in Artificial Intelligence, NVDA, Semiconductors, SOXS, SOXS-24-12, SOXX, TSM, ZeroHedge

So, It Begins

SOXX, pre-market, down a solid -3.2%.

Taiwan Semi (TSM) is the primary reason with its own trading down over -5%,.

If this really is the top of the A.I. bubble, the potential (now apparent) reversal was covered well in advance, here, here, and here.

If this is not the top and there’s more to go, the SOXX would need to retrace significantly, find support and thrust energy to mount another rally (not advice, not a recommendation).

Note: MACD indicators are bearish divergent on both daily and weekly.

Making It Up, As We Go

Of course, the press has to make up a reason for the pre-market rout. So, for today, we have this and this.

Tomorrow is a whole ‘nother story, literally 🙂

Semiconductor SOXX, Weekly

The blue arrow notes only one other time (in history) in the SOXX, where downward thrust exceeded that of week ending, April 19th.

Otherwise, we have the usual suspects: Terminating wedge, dissipating energy, Fibonacci correlations for chief cook and bottle washer Nvidia, link here.

Stay Tuned

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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

Hanging By A Thread

July 13, 2024 By in Artificial Intelligence, NVDA, Semiconductors, SOXS, SOXS-24-12, SOXX, Up-Thrust, Wyckoff

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

    The SOXX … Day 55 (+2)

    July 11, 2024 By in Artificial Intelligence, NVDA, Semiconductors, South Sea Bubble, SOXS, SOXS-24-12, SOXX 1 Comment

    Margin of Error

    If you’re upside down in a diving stall, shown here, there’s no margin for error or you’re dead; literally.

    The big problem for engineers, it doesn’t work that way in the markets.

    Two days after this post, we have a potential reversal in the SOXX (not advice, not a recommendation).

    Of course, the engineers have long since left the room as there was an ‘error.’; not getting the (potential) reversal exactly right.

    If the AI mania is over, that update two days ago was off by two-days; the biggest bubble in world history … at least since the South Sea Bubble.

    So, let’s move on to the chart.

    Before we get started, also note, Nvidia has not made a new (all-time) high. This update identified that reversal correctly (so far).

    Semiconductors SOXX, Daily

    As of 11:05 a.m., EST, the SOXX has posted out-side-down.

    When Fibonacci counts get longer, there is more room to be off by a few days.

    If this is the reversal for the SOXX, a two-day margin is fully acceptable (not advice, not a recommendation).

    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

    Nvidia … Still The Leader?

    July 5, 2024 By in Artificial Intelligence, NVDA, Semiconductors, SOXS, SOXS-24-10, SOXX

    Setting The (Reversal) Hook

    Nvidia just posted an Up-Thrust, reversal on the daily.

    The rest of the SOXX, whistles past the graveyard.

    If one looks only at the SOXX, everything seems to be ok; it’s recovering (sort-of).

    However, leader NVDA, may be at The Danger Point®, ready to head lower (not advice, not a recommendation).

    Nvidia NVDA, Daily

    We’ve just had an a-b-c correction from the June 24th lows.

    That correction posted a Wyckoff Up-Thrust with yesterday’s penetration of resistance (blue line) and today’s reversal.

    Note: Both upward moves (wave ‘a’, wave ‘c’) are of equal length but are divergent in thrust energy.

    We’re at the point where anything can happen.

    However, this is the place where risk for being wrong on a short position, is least (not advice, not a recommendation).

    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

    Nivida Blow-Off Top?

    June 27, 2024 By in Artificial Intelligence, Ed Dowd, NVDA, Semiconductors, SOXX

    Supplementary Data, Independant Source

    Before we get to the ‘independent source’, a quick review of the June 21st, update (emphasis added):

    “With the prior update letting us know the air is going out of support for continued A.I., today’s action may be a significant reversal (not advice, not a recommendation).”

    That was based on a wide gamut of data with none of it, ‘fundamentals’, except ‘the money’s gone’; the conclusion, NVDA, may be at a significant inflection point (not advice, not a recommendation).

    All of that, on this site, right here in River City. 🙂

    Independant Source

    Now, we have this from Ed Dowd, link here (time stamp: 5:45, 8:30, and 9:40) saying NVDA, had an ‘exhaustion top’, posting on two timeframes.

    Note: Wyckoff analysis, with its century-old technique, is coming to the same conclusions as the Wall Street ‘number crunchers’ with near-infinite computing power.

    Now, on to the chart.

    Nvidia NVDA, Daily

    The trading channel (blue lines) is potential only, not confirmed.

    What we do have, is once again, NVDA being influenced by Fibonacci time-correlation(s).

    Nvidia reversed on Fibonacci Week 89, from the October 14th, 2022, lows.

    Now, its adhering (so far), to daily Fibonacci.

    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

    Set-Up, For Gap-Down?

    June 23, 2024 By in Artificial Intelligence, NVDA, Semiconductors, SOXS, SOXS-24-09, SOXX, Uneducated Economist

    The Key Lies with Past & Present

    This update will show why there’s a probability for lower open, lower price action, and/or ‘island-gap-reversal’, for the SOXX, at the next session.

    With the understanding that ‘anything can happen’, let’s get into the SOXX price action, along with chief cook and bottle washer, Nvidia.

    Market Reversal?

    First off, does anyone expect a significant reversal?

    Following the breadcrumbs, here’s a link from the comments section posted during a livestream by Uneducated Economist; go to Time Stamp 23:45.

    Note: The second link is not from Simon (Uneducated Economist) himself but obtained from snide remarks made to him during his livestream.

    Using the timestamp, judge for yourself.

    My takeaway is:

    They don’t know. The amount of time wasted ‘crunching the numbers’ is mind numbing. Number crunching is easy and that’s why (nearly) everyone does it.

    Reading price action (effectively) is hard and that’s why you’re here. 🙂

    Semiconductors SOXX, Daily Candle

    The chart highlights the ‘island-gap’ potential.

    However, the real story is in the second chart, Nvidia.

    Remember that markets tend to alternate. Last time, is not this time.

    The last time Nvidia had a significant outside-down, it went into consolidation before moving higher.

    Nvidia NVDA, Daily Candle

    Looking at the chart, ‘this time’, is already different.

    From the 10:1 split, to outside-down, is Fibonacci 8-Days.

    Last time there was a wide outside-down (March 8th), the next day was narrow range, volume decreasing,

    This time, we have narrow range, volume increasing.

    The Higher Probability

    Taking it all into account, the higher probability is for continued downside. It’s a probability, not a guarantee.

    If we get upside at the next session, then it’s time to stand aside, re-sharpen the pencil and start looking for another reversal potential (not advice, not a recommendation).

    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