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.
If we’ve reversed from the top on the AI roadshow, expect the ‘easy money’ hype, to increase as price action heads lower.
It should be all too familiar; it’s a buying opportunity, the consumer is strong, the economy is strong … so, it goes.
The new, young, or uninformed ‘investor’, continues to average down, believing the hype; whatever’s happening to the downside, is just temporary.
Eventually, those participants start to sell.
Selling slowly at first, but then gathering steam. Those incorrectly positioned, provide the fuel for more downside.
With that, let’s go to the leveraged inverse fund SOXS.
Semiconductors, Leveraged Inverse SOXS, Daily
The chart is self-explanatory.
Hard Stop (definite exit) at the prior session low of SOXS 8.89. Soft Stop (trader discretion) at today’s session low of SOXS 9.21 (not advice, not a recommendation).
Next up, and depending on price action, we’ll discuss a potential trading channel.
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 in case someone’s not seen what a ‘whack’ looks like, here it is.
Notice, the kid on the left seems to be saying ‘It’s not that bad’ … oh, really? 🙂
A few seconds later we get to The Whack. The kids run off and the ‘old timer’ comes in to take their place, with his ear protection and respirator.
A perfect analogy for the markets.
SOXX, To New Highs, or Last Gasp?
If the bulls are going to regain control, this would be the place. If they can’t hold on, then it’s likely we’ve past the top last Tuesday, the 18th.
Depending on how the market closes the session (currently, 11:35 a.m., EST), the stop on the short position (via SOXS) may be moved higher (not advice, not a recommendation).
Ideally, we need to have a new daily low on the SOXX (high on the SOXS) to move the stop.
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.
We’re about to find out if last Tuesday, was the top in AI, or just another interim top on the way higher.
No matter the Taiwan Semi slow-down, mainstream media’s not even considering we’re near (or past) a potential long-term reversal.
For this update, the SOXX is being used as proxy for the AI mania. The chief cook and bottle washer in this latest delusion is Nvidia (NVDA), which reached a high on Friday, July 14th.
Basic Indicators, Wyckoff & The Cat
Even without using Wyckoff analysis, basic indicators like MACD, both on daily and weekly are telling us the momentum has slowed; on the daily, it’s outright reversed to the downside.
From a Wyckoff standpoint, we’ve had an up-thrust (reversal) that’s been supported by decreasing up-volume and increasing down-volume (shown on daily, below).
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) releases lackluster results, revenue slowdown and new building construction delays.
TSM says the delays stem from the inability to find qualified workers.
Edward Dowd provides insight on the overall reduction of employees, in this interview (Time stamp 5:10).
Bull Trap Shut, Train Leaving Station
If there ever was a ‘gotcha’ moment, this is it.
Even while the mainstream continues to tout the hype, here, here and here, the market has reversed (not advice, not a recommendation).
The daily chart of SOXX, has the MACD bearish divergence confirmed. Price action is now (as of 3:05 p.m., EST) well below the breakout (blue line) resistance area.
Semiconductor SOXX, Daily
This site does not give advice, but it can be inferred by reading the reports what actions are being executed (not advice, not a recommendation).
With that said, short positions in the SOXX, via leveraged inverse SOXS, were entered early during yesterday’s session at SOXS 8.54 and SOXS 8.69.
As a side note, within minutes after today’s market open, the gain in the SOXS, fully erased the -7.9% loss via LABD, noted in yesterday’s update.
The Biotech ‘Bid’
For whatever reason, probably to be revealed months or years from now, biotech, the instigator of the ‘elephant’ is not selling off into a market collapse as expected.
Instead, the effects are being played out in low-margin industries like airlines and semiconductors.
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.
If Artificial Intelligence, really is the last of the bubble(s), isn’t it appropriate we culminate in a market top of the ages, with the desire (and delusion) that we can be like God.
Let’s ask ‘AI’ how to get rid of spike protein … see what it says.
We’re around mid-day; the SOXX, is raging a bull/bear battle inside the range of yesterday’s session.
Tuesday’s session was not able to post a new high or low. With that said, the Fibonacci count from the last update remains intact.
Semiconductor SOXX, Daily
The chart shows upside pressure (volume) is dissipating.
As of this post, the MACD (not shown) is flat, waiting to tick lower; not yet confirming the bearish divergence.
A penetration of the prior session low, SOXX 524.11, would give a classical analysis sell signal (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.
While the media’s wasting no time setting up the average investor, for a ‘guaranteed skinning’ (as Dr. Elder used to say), providing an environment of constant, incessant, AI ‘get-in-now’, buy recommendations.
With that said, an ominous market sign has appeared.
As the daily chart of SOXX shows, we either have a breakout or a hole that’s about to be filled (reversed).
Semiconductor Index SOXX, Daily
In technical terms, the SOXX is in Wyckoff ‘Up-Thrust’, reversal position (not advice, not a recommendation).
A tick lower in MACD, confirms the bearish divergence.
Then, there’s Fibonacci
Enter, The Count
When markets are in a mania, reaching insane extremes, it allows for a (more) clean print of either Fibonacci retrace levels or time correlation.
Decide for yourself if that’s the case now.
Remember, tomorrow (Wednesday) is the 19th, and one day before Taiwan (TSM) releases earnings.
That release is scheduled for the 20th before the open.
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.
The ChatGPT craze lasted just long enough to ramp Nvidia and the SOXX, to stratospheric levels.
In the coming weeks and months, we’re likely to see who ‘cashed-in’ (a la Elon Musk) and for how much.
When a bull market nears the end of its lifecycle, it tends to thin-out.
As the smaller cap stocks fall away and underperform, they’re sold and that capital’s funneled into the ‘last man standing’; in this case, Nvidia (NVDA).
Broadcom (AVGO) is there as well, but it’s a distant second at 1/3rd, the market cap of NVDA.
Short Positioning
We’re short this sector via SOXS (not advice, not a recommendation) with entries shown in the prior update.
There was a third entry on 7/6 (not shown), but it’s minimal size when compared to the others.
Now, on to the charts
Semiconductor Leveraged Inverse Fund, SOXS
The following chart has the current hard-stop progression and soft-stop (trader discretion) locations.
Moving in closer with the zoom version.
The ‘AI’ bulls are in their brain stem (un-thinking), enabled in their fantasy by articles like this one and this one.
Of course, there’s more like here and here but we get the picture.
Taiwan Semi (TSM) Earnings Date
At the time of this update, TSM earnings date was an estimate, now confirmed as July 20th, before the open.
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® 