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.
Price action detailed below, shows upside reversal (not advice, not a recommendation).
It’s been a while since the last update on Nat-Gas, UNG.
Since then, price action sliced through support (shown in the update), posting new lows.
However, over the past week, the character has changed.
Natural Gas, UNG, 3-Day
Today is ‘Day 3’, for the chart’s price bar; tomorrow’s action begins a new ‘3-Day’ bar.
At this juncture, the prior three-day move to new (daily) lows has been negated with today’s action.
If positioning long, the obvious stop level would be the low of the current three day bar at UNG 13.89 (not advice, not a recommendation).
Anything Can Happen
The past two weeks has shown us, in no uncertain terms, that anything can happen.
So, it is with the markets.
Nat-Gas has been bouncing around historical lows for some time; plenty of time to wear out any (remaining) bulls.
SOXX Housekeeping
While under no obligation to discuss open (or closed) trades, as a courtesy, today’s price action forced closure of SOXX short trade; SOXS-24-12
Total profit on the trade, having twelve separate entries and one exit (today) was just over 19%.
We’re potentially at the top of the largest mania in history save the South Sea, expecting things to go in a straight line is (apparently) not realistic. 🙂
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.
For the next three-months, until the end of October, the (net) seasonality of the markets is down.
That’s not all.
According to this link, we have a bevy of technical and fundamentals suggesting the overall direction of the markets is to lower levels (not advice, not a recommendation).
Lower is good … at least if one is positioned short.
With that, we’ll look at the semiconductors, SOXX, to see how seasonality might help on a (potential) short position.
Semiconductors SOXX, Daily
If the channel remains intact, we’re still at the beginning.
Of course, the very next session can completely blow this analysis apart. That’s the way of the markets.
For now, however, we do have a channel, we do have the above-mentioned seasonality; probability and pressure is to the downside (not advice, not a recommendation).
Turkey & Position
For those familiar with ‘Reminiscences‘, and ‘Turkey’, a.k.a. Mr. Partridge, we should all know the importance of maintaining position.
The objective, therefore, is to attempt to maintain a short position (via SOXS, or other short) as long as possible, given the trading channel and bearish bias (not advice, not a recommendation).
Simple But Not Easy
One of the very first things the Online Trading Academy (Dallas) told their class back in the day, working the markets with a profitable plan of action should be ‘simple’.
They also said, the problem is, it’s not easy.
Here’s just one unrelated example of a simple job (i.e. ‘protection’) that’s obviously, not easy.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
It’s not hyperbolic to say, what’s happening to Nvidia right now, has never happened before.
As we’ll see on the chart, the market itself proves that point.
Work has already been done (here, here, here and here) on why Nvidia, may be at a significant inflection point (not advice, not a recommendation).
Now the smoke has cleared from Friday’s session, we can look at what happened and what’s likely to happen.
First, we’ll use a Fibonacci 8-Day, chart.
Why? Because nobody else uses one. 🙂
Besides being a Fibonacci number (just like the Weekly, at 5-Day), the 8-Day, seems to show the potential better (at this point) than other timeframes.
Nvidia NVDA, 8-Day
Let’s go all the way back to the beginning and why the current situation is unique.
NVDA, started trading the week of January 22nd, 1999.
During that span, there are no two Force Indicator occurrences (shown below) at this level of energy.
In fact, there are no Force Index prints at this level, ever.
The only print that comes close is also shown on the chart, occurring in late May, of ’23.
An astute observer can instantly see the trouble or potential trouble.
During the consolidation period from mid-March to late April, Force Index declined and eventually posted negative.
That temporary wash-out provided fuel for more upside.
Now, price is rising with force declining, at the same time.
The inference, the rally is weak if not extremely weak.
Let’s not forget, the ‘old-timers’ say it’s the biggest bubble they’ve ever seen.
Couple that with NVDA, having already launched from bottom to top, 1999 – to- Latest Highs, a massive 469,000%.
Time permitting, in the next update, we’ll look at the potential for an ‘Island Gap Reversal’, in the SOXX.
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.
