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.
Since the A.I. money’s already been made on the upside, it could be time for the bears to set the hook on the shakeout, driving the Semiconductor sector farther down.
This just out from the Mises Institute; author Justin Murray argues, A.I. is essentially an expensive hype, that’s run its course.
With that, we’re not going to belabor whether A.I., is a bubble, a scam, a grift, or not.
No, we’ll let the price action itself make the case. 🙂
It’s hard to argue with the reality of the chart
Semiconductors, SOXX, Daily
If the trading channel remains in effect, we can see the downside potential is enormous (not advice, not a recommendation).
The arrow shows the entry location of the current, active short: SOXS-24-15.
Since that initial entry and with nearly each price rebound, the short size has been increased (not advice, not a recommendation).
Stops Are Tight
It’s important to note, as of this post (11:38 a.m., EST), the SOXX has not (yet) made a new daily low.
In the markets anything can happen. We could always get an upside reversal.
However, from a seasonality standpoint, September is typically the worst (downside) month of the year.
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.
Just like the image at left, Nvidia looks like it’s ‘strapped in’, for the ride down (not advice, not a recommendation).
The upside doesn’t last forever and neither does the downside … unless of course, you go bankrupt. 🙂
With that, let’s see where Nvidia may be going.
Note: Recall, the potential for a top, was identified two weeks ahead of time, then confirmed.
Nvidia NVDA, Weekly
We’ll cut straight to the chase and show how price action is ‘respecting’ the Fibonacci projections (thus far).
With price action in the SOXX, confirming yesterday’s trendline ‘artistic license‘ post, at this point, it appears the downside for the sector is well underway (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.
Back in the day, Robert Prechter Jr., said it himself (paraphrasing):
‘You can reap a windfall, just by monitoring a trendline’
Of course, the hard part is identifying the trendline … if there even is one.
Implied with that, already being in position to take advantage of that trendline.
Building The Trade
Positioning short in the SOXX (via SOXS) has been a process of iteration; from SOXS-24-12, until now, SOXS-24-15 (not advice, not a recommendation).
All of those trades have been documented on this site.
Note: Enter the trade number (or, copy-paste) into the search window and then click on the sidebar to get chronology of all posts related to that trade.
With the SOXX, opening down, yet again, one has to ask; is there a trendline and if so, where is it?
Semiconductors, SOXX, Daily Close
I’m taking artistic license to draw where I perceive is the current right-side trendline.
Also note, this update is being released with about 90-minutes left in the session.
The closing price is yet unknown.
Going forward, price action itself will either confirm or negate the right side.
Positioning
As shown on the chart, the current (active) short trade, via SOXS, was opened last Friday at the ‘False Breakout’ (not advice, not a recommendation).
With price action continuing lower, it would be nice for this position to become a boring series of actions; moving the stop until the trend break and/or exit.
All the while, keep in mind, we don’t know what our ‘October Surprise’ is going to be … yet.
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.
Market reversals tend to occur just before, during, or just after a holiday week.
Is that where we are now?
Semiconductors (SOXX), and it’s chief cook and bottle washer, Artificial Intelligence (NVDA), may have already decided the next direction … down.
Semiconductors, SOXX, Daily
It’s just after the open and this is where we are.
“What do you see?”
Marking up the chart, we have a sell-short indicator (not advice, not a recommendation) right along with a hard stop location (as shown).
From yesterday’s update, those that watched the presentation by Robert Prechter Jr., were challenged with the idea, we’re in the largest bubble ever or at least since the 1720s South Sea Bubble (not advice, not a recommendation).
Positioning
In the sidebar, we can already see a short position was opened during last Friday’s session: SOXS-24-15 (not advice, not a recommendation).
Everyone has their own style and for me, I detest ‘chasing’ the market.
I’d rather make several attempts, get stopped out, then enter again, than watch the opportunity take off because I was too afraid to pull the trigger.
It’s only 20-minutes after the open and we can see the SOXX, is down hard.
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.
Pre-market action (as of 8:03, a.m., EST) in the SOXX is higher at 229.48, but below yesterday’s print high (SOXX 231.02)
During sustained uptrends, and by not printing a new daily low (SOXX 223.62), puts the SOXX in a potential bullish set-up (not advice, not a recommendation).
However, at the same time, we’ve hand what could be considered an initial leg down from all-time highs on July 11th, to lows, August 5th, then a corrective rebound, where we are today.
As we’ll see below, there are two scenarios … the ‘red’ pill and the ‘blue’ one.
Semiconductors SOXX, Daily
If the SOXX, posts a new daily high the short, SOXS-24-14, will be exited (yet again) to stand aside for the potential gap-fill (not advice, not a recommendation).
From a trading standpoint, it’s not unusual to ‘spend money’ to get into position if the potential reward is large enough.
Note, there has been no ‘money spending’ yet, as the last short trade SOXS-24-13, was profitable by about +4.9%
With the potential reversal of the largest bubble in world history, one could consider the downside opportunity in the SOXX, to be significant. 🙂
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 Cliff Notes version of what’s happening with the SOXX, is this:
NVDA, has not posted a new daily high.
However, the SOXX, pushed to a marginal new daily high, stopped out the short position and now appears to be in collapse (not advice, not a recommendation).
The new daily high for the SOXX, counts as a Wyckoff Up-Thrust and reversal to the downside.
That’s where we are now.
Positioning:
The amateur never gets back in once stopped out (per Dr. Elder). I have long since passed that mental block; repositioned short again (not advice, not a recommendation).
Trade is labeled as SOXS-23-14 … charts to follow.
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.
As of 7:34 a.m., EST, The SOXX is trading unchanged to slightly higher.
From yesterdays close, with forming a minor spring set-up (shown below), today, there’s only one right answer for the shorts.
That answer: The SOXX, needs to open lower and post lower (not advice, not a recommendation).
More importantly, it can’t post a new daily high or SOXS-24-13, trade will be exited (not advice, not a recommendation).
Semiconductors SOXX, Daily
Price action is still at the edge of the lake, where anything can (easily) happen.
The SOXX, has formed a minor spring set-up but the expectation is for that set-up to fail with a lower open and lower post (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.
The Danger Point® 