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.
Even if we knew the A.I. bubble has burst, that it’s beginning a multi-year decline (or something worse), even if it was known, trading bubbles like this, is not easy (not advice, not a recommendation).
It might be simple, but it’s not easy.
With the market in chaos, we have the usual suspects out making things complicated; sharpening their pencils, attempting to connect financials with price action.
It always looks good on the surface.
However, as Nissam Talib said in The Black Swan (paraphrasing), he’d rather have a New York street smart, hoodlum reaping a windfall, than a pointy-headed PhD on the sidelines, pontificating about how the strategy’s not consistent with mathematics.
All of which brings us to the truth, price action itself.
Semiconductors, SOXX, Daily
Once again, the trendline has been adjusted based on price action.
The gap lower open from yesterday has been effectively closed during this session (as of 1:50 p.m., EST).
The expectation is for today’s high in the SOXX to hold; meaning, subsequent sessions will not post higher (not advice, not a recommendation).
For a short position, SOXX high of 217.27 (or the high for the day) is a good place for a stop (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.
Looking at the financial press and their Sunday night-leading-to-Monday, freak-out, one would think aliens just landed like War of The Worlds. 🙂
Of course, it’s only a complete shock to those attempting to link fundamentals and financials to price movement … a never ending and futile task (not advice, not a recommendation).
With that said, let’s forget about multiples, taxes, and tariffs and look at what the market is actually telling us.
Semiconductors, SOXX, Daily
Note the ‘Decisive’ Contact point.
During last Friday’s session, price action level (monitored in real time) 220 – 224, was decisively rejected with a swift retreat and lower close for the day.
Anything can happen. However, at this point, the SOXX continues lower and (for now) appears bounded by a trading channel (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 gap-lower open Monday, January 27th, was only retraced by a Fibonacci 23.6%, the next day before continuing lower.
If that percentage holds, it’s a rare occurrence and represents extreme weakness (not advice, not a recommendation).
The chart for NVDA, shows we’ve had the largest down-thrust energy in history (NVDA began trading 1/22/99).
Now, it’s hanging below resistance (blue line).
Nvidia NVDA, Daily
Last Friday closed lower; after-hours, lower, still.
Strategy, Tactics, Focus
As the ‘About‘ section says, techniques on this site are laid out by three masters and coached, mentored, by one of, if not the best in the industry (the late David Weis).
With that said, everyone has their own style.
Currently short the sector via SOXS, as SOXS-25-04 (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.
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
DeepSeek AI App Demonstrates Pro-CCP Bias, Influence, link here.
The list is seemingly endless. Time for everybody to pile-on to the new narrative.
However, it does beg the question, Isn’t ‘The Thing‘ somewhere on I-10, in Arizona? 🙂
Getting back to reality, chief cook and bottle washer Nvidia, we’re going to adjust the trendline (just a bit) from yesterday’s update.
Nvidia NVDA, Daily
The objective is, maintain short, monitor the trend for potential break (and exit), wherever and whenever that may be (not advice, not a recommendation).
It’s important to note, yesterday’s action was Spring-to-Up-Thrust; penetration of the prior day’s low and high.
Then, The Fed
Also note, we have the Fed coming up with more shenanigans in about two hours (as of 12:03 p.m., EST).
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.
Now that one pillar of the A.I. mania has vaporized, ‘what’s next?’
To begin the search, let’s start with this headline from yesterday:
“No One Was Buying”: An Ominous Post-Mortem Of What Happened Today From Goldman’s Trading Desk, link here.
That may tell us all we need to know.
But of course, it can’t be that simple. We have to make it complicated with ‘experts’ piling on, pontificating about ‘earnings growth’, ‘multiples’ and the like.
However, did any of that play into identifying the SOXX reversal, almost to the day?
Short answer is, no.
So, why would it be a factor in determining the most likely (next) outcome?
With that, let’s take a look at the chart.
Nvidia NVDA, Daily
It’s an aggressive viewpoint; that is, NVDA’s not going to fill the gap and is in the midst of a sustained down-move (not advice, not a recommendation).
If the A.I. bubble, potentially the largest bubble since the South Sea, imploded yesterday, the chart seems like a reasonable viewpoint (definitely not advice, not a recommendation).
Loeb & Focus
Few people talk about Gerald M. Loeb, late Vice Chairman for E.F. Hutton
He’s the one that said to ‘focus’ one’s efforts on the few and rare, real opportunities.
With that said, NVDA and the SOXX are moving now, while other market appears stagnant.
Therefore, the focus is on this sector (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.
On the daily bar-chart (not shown), we have a massive gap-lower open.
Will that gap be filled or is this a real breakaway and the start of a long-sustained bubble deflating decline?
That of course, is unknown.
What is known and presented on this site, Wyckoff analysis, with its century old technique, spotted the potential for reversal well ahead of the actual fact (not advice, not a recommendation).
Final Note
As the sidebar shows, since the beginning of this year, there have been several attempts to position short in the SOXX via leveraged inverse fund SOXS.
Trades SOXS-25-01 (not discussed), and SOXS-25-02, were first, then closed, with trade SOXS-25-03, opened last Friday (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.
During the internet bubble of the 2000s, after the trend break in the QQQs, price action immediately began its long (multi-year) descent.
Naturally, it would follow when comparing that bubble, with the A.I. bubble, as was done here, one would have thought once the trend is broken, down we go.
Not so, today.
Instead, we have depending on how it’s measured, at least ten-weeks (so far), testing of that break.
Is it all about to change? Are we at ‘tests’ end?
Semiconductors SOXX, Daily Close
The most recent update showing the ‘trend break’ as discussed above, is here.
The chart below, presents a possible ‘last gasp’ for the SOXX (not advice, not a recommendation).
From a Wyckoff analysis standpoint, the market ‘by its own action’, has told us the axis line above, is important.
If the chart is correct and we’ve had a false breakout (Wyckoff Up-Thrust), the expectation is for downside follow-through (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.
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