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.
Wyckoff (tape reading) analysis identified the potential reversal in XBI.
In the past two days of trading, biotech XBI, is decisively lower (not advice, not a recommendation).
However, there’s more to this story.
As we’ll see below, Fibonacci is at work as well.
Biotech XBI, Daily Close
From closing high on 2/27/24, to closing high on 9/19/24, was a Fibonacci 144 days (minus one).
Ladies and Gentlemen, it doesn’t get much better 🙂
The black lines show resistance penetration, up-thrust and reversal.
Livermore, Wyckoff & Loeb
The trading methods of the three market masters above, can be summarized as:
Strategy, Tactics and Focus.
Livermore’s method of ‘what’s going to happen in a (potential) big way’, pointed to biotech.
Wyckoff’s analysis was used to identify (to the day), the potential for a significant reversal.
Loeb, who is less known, was the former Vice Chairman of E.F. Hutton, disparaged ‘diversification’ as the ‘averaging of errors’; meaning, if you don’t know what you’re doing (in the markets), you ‘diversify.’
We can see all three at work in the selection to go short biotech via LABD (not advice, not a recommendation).
Fixing Errors
For those watching, you got to see up close and personal a trading error on shorting the SOXX; specifically, an -11.6%, hit, link here.
As of this post, four trading days later, that loss has been fully recovered and then some.
This is how should be done.
Clear the mind, look for (don’t force) another opportunity, get to back to business.
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.
Shown in the chart below and similar to Nvidia (yesterday), the SOXX, is also at a potential inflection point (not advice, not a recommendation).
Maybe, it’s time to cue up the blues music; it could be an appropriate moniker for the road ahead.
Semiconductors SOXX, Daily
“What do you see?”
Below, what the market is saying about itself.
If this chart is in-effect, that is, if the market’s ‘respecting’ the trendlines and trading channel, we’re at the spot where one could ask, ‘Where to from here?’
As always, anything can happen and we could somehow, magically, power on higher; probabilities suggest not (not advice, not a recommendation).
Contra Indicators
If indeed, this past week was the infection point for Nvidia and Semiconductors as a whole, the euphoric ‘technology‘ conference, might go down as the most significant contra-indicator of the A.I., bubble (not advice, not a recommendation).
Let’s not forget, those in the know are cashing-out like there’s no tomorrow.
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.
Scuttlebutt from the Goldman Sachs technology conference, with chief cook and bottle washer Nvidia, had at least one journalist (do we still have those?) breathless, ecstatic (paraphrasing):
‘Never has there been so much euphoria’.
These links show how Fibonacci influenced potential, and then confirmation, of the all-time top and reversal.
As we’ll see below, price action continues with Fibonacci.
Nvidia NVDA, Weekly
This week, is ‘Week 13’, from the all-time high.
Fibonacci correlations continue on the daily.
Nvidia NVDA, Daily
So far as of 1:53 p.m., EST, it’s an inside day for NVDA, with yesterday as the potential ‘short squeeze’, retrace high.
Yesterday was also a Fibonacci 5-days, from the most recent low (Day 55).
Retrace High
As is typically the case, the crowd is still euphoric (maybe even more so) long after the high.
This is typical ‘bubble’ behavior … the party goes on (even harder) as the ship goes down (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 said that demand had evaporated as seen by Force Index (thrust energy).
Nvidia went on to plunge over 15% before yesterday’s (what must have been a) short squeeze.
Coupled with that, was short trade (SOXS-24-15) in the Semiconductor Index (not advice, not a recommendation).
Yesterday, pre-market action (being short) for SOXX, did not look right; that position was exited just after the open.
Net profit for SOXS-24-15, was about +23.25%.
The whole scenario shows the importance of having the price action itself dictate the trading action.
The squeeze ‘excuse’ was the CEO of Nvidia giving a speech, then going off to sign women’s breasts … I’m not making this up.
All of which brings us to the chart.
We’re keeping the same Fibonacci 8-Day timeframe as the previous update.
Nvidia NVDA, 8-Day
There’s a lot going in with this chart.
First: Price action has become wide and unstable.
Second: The completed 8-Day, bar posted the deepest downside thrust energy ever.
Positioning
Once again, everyone has their own method and style.
With that, understanding where we could be in this market environment, i.e., the throws of reversal, another (tentative) short was opened in the SOXX (not advice, not a recommendation).
The stop on this trade (SOXS-24-16) is very tight … to be set near the (SOXS) lows of the session.
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.
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.
The Danger Point® 