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.
A massive four-year top, along with the latest ‘road-map‘, has this one going down; most likely, for good.
While other chip makers, have gone to near stratospheric levels such as Nvidia, with its 23,960% gain from 2009, lows, Intel has languished.
The rest of the markets, S&P, Dow, QQQs, have pushed on higher while INTC, has spent the last four years, in a trading range.
A sideways market is a bear market.
Intel never recovered its luster after the Dot-Com mania of the 2000s. Price action spent eight years heading sideways-to-down before bottoming out in early 2009.
After that, it’s been a long struggle to current levels.
Now, the markets have reversed and the economy’s collapsing. We’ve likely seen market highs that won’t be repeated in the lifetimes of anyone reading.
Friday’s announcement may be the kick-off for sustained price action to the downside.
INTC, Chart Analysis
The daily chart shows at least one breakaway gap and possibly two.
The next chart is on the weekly timeframe and identifies the long, multi-year, topping pattern.
When looking at these patterns, be reminded about the scale of what’s happening.
This wedge is massive … at least four years in the making.
Note: Price action finished the day right at the lower support. There could be a rebound on Tuesday (market’s closed Monday) or we could just keep going lower.
The SOXX Connection
Intel’s fifth in market cap of the SOXX, with Taiwan Semiconductor (TSM) at the top of the list.
Even the leader TSM, may not be immune to trouble.
Here are Fab locations for Taiwan Semi, located just off the coast of mainland China … nothing bad going to happen there, right?
In the case of the ‘wave’ analysis, if it proves correct, we’re possibly in for a sustained ride lower.
The daily chart of SOXX, shows each analysis point where a reversal lower was projected.
It’s clear from the chart and documented links, both methods nailed it … to the day.
Elliott was earliest and caught the exact point of inflection.
Wyckoff caught the test of the up-thrust.
Here’s the important part:
Wyckoff is a practical, bread and butter method. It looks at what the market’s saying about itself … is price action showing pressure to the upside or down?
Elliott Wave looks at where the market could be or is going.
If we’re really in an Elliott Wave Three down, it’s likely to be a decline like no other.
There are other indicators not market related, giving us hints, a massive collapse is ahead.
A Decline of ‘Biblical’ Proportions
Warning:
The following contains scriptural references.
Those who are in ‘it’s all a myth and fairy tales’ crowd, feel free to scroll to the ‘Summary‘.
For the rest of us, the secular world calls it ‘systems collapse’. The spiritual world calls it ‘judgement’.
Stated many times on this site, ‘the church’ is corrupt. Here’s just the latest salvo proving that point.
Along with the corruption, we now have the strong delusions prophesied over 2,000 years ago.
In reference to a Stew Peters broadcast, linked here, on the numerous media lies, is this comment (emphasis added):
“The only people to blame for this Stew are the ones who put on the mask, who distanced, who took the shot, who harassed other people and who advocated for my freedoms being taken away. Without doing five minutes of research.”
It’s not too much of a stretch to say, those who voluntarily injected themselves were (or are) in a place of delusion.
“And for this cause God shall send them strong delusion, that they should believe a lie:”
However, the injections are no lie … but the reasons for those injections are false.
Can this (spiritual assessment) really connect with what’s happening in the markets? How does it relate to actual price action?
Obviously, it can’t and shouldn’t be said that any specific price movement has been prophesied.
However, we can use the scriptural references to point us to the probability of events; the big picture, the situation at hand, the signs of the times.
The probability that we’re at some kind of major inflection point of Biblical proportions, seems exceedingly high.
Summary
Both Elliott Wave and Wyckoff Analysis, support the probability of lower prices ahead for the SOXX.
Because Intel (INTC) has been a laggard in the sector for years, suggests it may be one of the downside leaders.
As if to confirm the assessment we’re past the pivot, that generational highs have been reached, we have this just out, on ZeroHedge.
At the very bottom of the article, is a quote.
No, they’re not quoting from the King James Bible of 1611; they’re quoting from Shakespeare’s Richard III, of 1594.
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 been long enough; most have forgotten the ‘Flash Crash‘ of 2010.
That crash happened in May of that year.
May of this year, would make it 12-years and interestingly, a Fibonacci 144, months.
Normalcy Bias:
As Nissam Taleb said in his book, ‘The Black Swan’, every day is like every other day on the farm, for Mr. Turkey … that is, until Thanksgiving Day.
Let’s take a look at the historical chart of Semiconductor ETF SOXX, and see the effect of a Flash Crash.
Easy to spot … prices did recover by the end of the day.
What about the next time?
This report just out on ZeroHedge, shows liquidity is drying up in the bond market. Actually, liquidity has been drying up ever since Dodd-Frank of 2010.
All of this is working (to increase risk) in the background.
Let’s take a look at another unprecedented event … the downthrust and apparent recovery in the semiconductor index, SOXX.
SOXX, ETF, Daily Chart
First up, is the unmarked chart of the index.
Next, we’ll show the recovery higher is on diminishing volume.
There’s no real commitment to the higher prices …. they are just drifting upward.
We’ve already shown the Elliott Wave assessment of the current structure. Now, let’s look at it from a Wyckoff standpoint; Up-Thrust and Test.
Price action posted an Up-Thrust, declined and now has come back for an apparent test.
Confirmation Bias
At this juncture, both Elliott Wave and Wyckoff Analysis present a price action structure that’s set for downside reversal.
In a way, we’re at the danger point for both methods.
Summary
From a personal and corporate standpoint, going long in this market and all markets for that matter, was abandoned long ago (not advice, not a recommendation).
To borrow a phrase from Dan at i-Allegedly, he repeats over and over in his videos, ‘We’ve had warning, after warning’.
So, we have.
The SOXX, is telling us, it’s ready to resume action to the downside. After-hours, already has the index trading lower.
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
p.s. The insight of 2010 Flash Crash, anniversary of Fibonacci 144 months in May of this year, is exclusive to this site.
This site does not use Elliott Wave as a primary analysis tool.
However, to be aware of the technique, will at times provide an additional edge … like now.
Number Two:
Once again, gold and the mining sector have become unbearable to watch.
The amount of hysteria, hype and bloviation serves to make this market all about ego. Ego is a four-letter word for the professional speculator/trader.
We’re leaving it alone for now and moving on to the market at hand: Semiconductors (SOXX).
Semiconductors, SOXX
On a Monthly basis, the chart below is the entire trading history for the sector:
The next chart zooms into the area(s) of interest.
This market, the semis, had its most powerful thrust lower in January, for the entire history of the sector.
The following chart is where it gets interesting.
Elliott Wave labeling as shown. If correct, Wave 3, down has just started (not advice, not a recommendation).
Warning:
My former mentor, the late David Weis, who once worked for Prechter, said the approach is a “cookie cutter” (his words) attempt to force the markets into a pre-defined construct.
With that caveat in hand and the understanding the ‘wave’ could fall apart at any time, let’s see what it would project if price action followed the current labeling and structure.
The daily chart shows a Fibonacci projection based on the Elliott Wave labels:
The projections are in percentiles of the first wave distance.
Elliott Wave rules are that ‘Wave 3’ can’t be the shortest wave. If the structure holds, that means Wave 3 (if that’s what we’re in) would go below the 100%, level and potentially to 161.8%, level.
To Trade, or Not To Trade:
This structure was spotted late yesterday … after abandoning the gold sector. There had already been the pre-requisite hype about CPI numbers and such giving the ‘excuse’ for markets to rise.
That meant risk of a short position (yesterday, early today) was low: not advice not a recommendation.
The chart below of leveraged inverse fund SOXS, shows entry points for what is now: SOXS-22-01
Summary:
Taking a cue from the late Dr. Martin Zweig, on his words during this broadcast, he was very hesitant to use the word ‘crash’.
So, this update is hesitant as well.
However, if the forecasted move of SOXX, to the Fibonacci projected 161.8% level (or more) is realized, it’s a decline over – 37%, from current levels.
It would be significant … crash or not.
Stay Tuned
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.
However, this fund is not like inverse ETFs; SDS, DXD, SOXS, QID, DUST, and so on.
Basic Materials is not ‘popular’. At least, not yet.
That means the fund is illiquid with larger spreads (bid/ask). In addition, it takes a good few minutes after each open for those spreads to calm down and narrow up.
It’s not for the inexperienced.
Summary:
As we’ll get into tomorrow, ‘normal’, is gone.
There’s not going to be ‘normal’ (a personal opinion) in the lifetimes of anyone reading these updates.
That doesn’t mean there are no opportunities.
Basic Materials, DJUSBM, is about to, or already has (potentially) started its downside reversal.
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 last update on SOXX, noted one thing missing was a new daily low confirming the reversal. About 15-minutes after that post, SOXX printed a new daily low.
Now, we’re in an underside test of the breakdown.
The daily close chart (above) shows price action coming back to the underside. This is how the market squeezes out risk of a short position (not advice, not a recommendation).
Yesterday’s update had a link to ZeroHedge about how the market ‘has to’ move higher this week; the ‘selling’ is finished.
A healthy way to view this type of information is to be aware of the source.
If it’s a major retail brokerage or trading firm, their own (internal) market stance is likely to be completely opposite their financial press release.
Let’s see what happens next.
We’re not looking to short the SOXX but it’s still an educational exercise to monitor the sector.
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.
‘Spring-to-Up thrust’ is a common price action phenomenon.
Credit goes to the late David Weis for noting this behavior in one of his daily market updates from years past.
Now, we see it in action with SOXX.
As with airlines, semiconductors are highly susceptible to economic changes. Both operate on thin margins and have high capital costs.
Airlines (at least UAL and AA) have never recovered to new all-time highs. Maybe the semis went higher because of all the contract tracing that’s being projected.
However, noted in yesterday’s update, there’s a chance there won’t be much to ‘trace’; we’ll find out very soon.
SOXX is at the danger point; risk of a short position (not advice not a recommendation) is at minimum.
As an extra reminder, we’ll add a frequently discussed theme for market tops: ‘Holiday Turns‘
Emperical data shows that markets tend to reverse before, during, or just after a holiday week.
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.
Head & Shoulders patterns are showing up in several markets.
First, there’s biotech IBB … and now the SOXX.
The SOXX is higher in pre-market around +2.5% , +2.70%, near 385.25.
Conversely, inverse SOXS is down -9% to -10% near the 14.00 -area.
Today could be the day where risk is minimized to position short via inverse SOXS (not advice, not a recommendation).
If SOXX remains below yesterday’s high of 397.71, it has set itself up to break the neckline. Once that’s completed, we’d then have a measured move lower to around 320.
If short via SOXS, the stop would theoretically be yesterday’s low of 13.21.
We all know however, inverse funds and especially the 3X versions, have significant negative erosion.
If during the regular session, SOXX price action persists throughout the day near yesterday’s high (397.71), inverse SOXS will continue to erode below its own prior daily low.
A different view is the Right Shoulder has not been completed. We’ll know that if SOXX makes a new daily high.
It’s a myriad of scenarios and the professional understands there’re an infinite number of outcomes. However, at times, risk is reduced enough to take a position on a probable direction.
At this juncture and given the above conditions, the most probable direction is down.
One last caveat.
SOXX has broken below well established support. That puts it in Wyckoff spring position. The market will automatically attempt to rally as we see in the pre-market.
Based on the conditions described, we’re expecting that spring attempt (to new all time highs) to fail.
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.
Did SOXX just break away during the past week or is there going to be an attempt to close the gap?
When a market closes down for the week and near its lows, there’s usually follow-through action at the next open.
SOXX may never get the chance to fill the gap.
If we look at inverse fund SOXS, it’s showing a potential trend-line. Maintaining that line will double the price (at Friday’s close) sometime in early March.
The chart below also shows the firm’s entry point; not advice, not a recommendation.
In a way, semiconductors are similar to aviation; margins are razor thin.
When there’s an economic down-turn, both get hit especially hard.
At this juncture, I have positioned my firm short in both real estate (via DRV) as well as short the semi-industry (via SOXS). Not advice, not a recommendation.
The SOXS position finished in the green by the close. DRV is showing a loss but closing that gap quickly.
Separately, and in a report planned for tomorrow, we’ll cover the food supply. The ongoing (planned) shortage is proving correct, the approach it’s ‘corn first, then silver and gold’.
If Van Metre’s GDX forecast is on target (declining to 17, or even 14), gold bugs may find themselves liquidating their positions; just so they have enough money to pay for hyper-inflated food.
In effect, gold will be irrelevant; a very possible (short-term) event.
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® 