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.
Those on the bear side of the AI insanity, know in their gut, this sector’s going to implode in spectacular fashion (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.
What’s happening in the markets is important but so is what’s not happening.
The SOXX, as of 1:15 p.m., EST has not made a new daily high.
Price action’s hovering in a tight range and looks to be coiling for a directional move.
If the breakout is to the downside as anticipated, here is where the ‘rules’ come in.
The ‘Rule’ of Alternation
Originally discussed by Prechter years ago, as an observation, the rule is basically described as:
‘The market will alternate in wave structure from complex to simple or from simple to complex.’
When we look at the SOXX, the implication is, we may be due for ‘simple’ wave structure (not advice, not a recommendation).
Semiconductors SOXX, Weekly Candle
The weekly chart shows the potential.
The first leg down was complex, overlapping price action.
If there’s a break to the downside, the ‘rule’ says to expect price action to alternate from a prior complex structure, to simple (not advice, not a recommendation).
The Maverick of Wall Street
One recent example of such a move can be found at this link, time stamp 11:20.
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.
From a strategic standpoint, this past Friday was the end of the Quarter and possibly the lowest risk spot to short the semis (not advice, not a recommendation).
‘Low risk’, does not mean, ‘no risk’.
We’ll look at the chart below for the SOXX, but first some housekeeping on the Junior Miners, GDXJ.
As stated in the last update, if there was more GDXJ, upside, shorts (via JDST) would be exited. That’s what happened with an overall gain of + 3.57%, on the series (beginning 6/16/23).
Now, on to the next circus … Artificial Intelligence; more specifically, NVDA and its cohort, the SOXX.
Where’s The Money?
With the quarter over, money managers have dutifully shown they’re like everyone else, ‘investing’ in AI.
That’s out of the way, so let’s move on to the specifics:
Referring back to the excellent investigation done by The Maverick, in his view, the $11 Billion, is “Fantasy”.
The tricky part from a chart standpoint, is to identify when or if that fantasy is going to be exposed.
Semiconductor SOXX, Weekly (Inverted)
We’ve taken the weekly chart of SOXX, and inverted it as if going long the leveraged inverse SOXS (not advice, not a recommendation).
Downside force dissipating with each major thrust.
Last week was an ‘inside week’; price action could not make a new weekly low.
Couple that with end of quarter, potential ‘window dressing’ and this past Friday, may have been the lowest risk point, for shorting via SOXS (not advice, not a recommendation).
Analysis … not Advice
This site cannot and will not give advice.
What it can do, is provide analysis and strategy so that you can make your own determination on the market.
With that said, the ‘heads-up’ for a top in the SOXX, was posted on June 17th, link here.
Since that time, the SOXX reversed down and has now come back to test.
Positioning
On Friday, the SOXX, was shorted by entering long the inverse fund SOXS, at 10.01.
Soft stop (trader discretion) for the position is the session low at 9.75, and hard stop (no excuses exit) at all-time low of 9.48 (not advice, not a recommendation).
The coming weeks may prove interesting. All eyes will be on that ‘$11-Billion’.
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.
Beginning at time stamp 6:24, at this link, The Maverick goes through an investigation into NVDA, projections.
‘Something doesn’t add up here ….’
That report was three weeks ago. What’s happened, lately?
As of the close this past Friday, NVDA, the largest in the SOXX, was at $1.1-Trillion, market cap. A distant second, is Taiwan Semi (TSM) at $545.5-Bln.
Below, we have a confluence of events for the SOXX.
Semiconductor (ETF), SOXX, Weekly Candle
We’re at the top of a trading channel.
We’re in Wyckoff ‘Up-Thrust’ (reversal) position.
A lot of volume expended with less (net) upward progress than previous volume spike; ‘effort vs. reward’.
Getting down to the daily, we see a terminating wedge that’s coupled with reduced volume.
Semiconductor Index SOXX, Daily Candle
So, what does that mean?
The ‘probabilities’ for more upside are, or have been, reduced significantly (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.
With today’s outside-down (as of 2:43 p.m., EST), that makes it two key reversals for GDXJ, in the past five trading days.
While it looks like the whole herd is focused on the new mania, Artificial Intelligence, back at the ranch, the miners are painting an ominous picture.
Rendezvous With Destiny
The first two-minutes and ten seconds, at this link, are all that’s needed to get the idea of what’s likely to come.
The market recovered (fairly quickly) from 1987 … this time, may indeed be different.
The Elephant Sleeps
Ah, yes. The elephant no one talks about … or more accurately, are afraid to talk about.
Three links here, here and here, show us the elephant may be about to awake.
From the bottom, May 25th to now, is a Fibonacci 13-Days.
Is that important?
Here’s a prior analysis on Real Estate IYR, that shows how Fibonacci can identify the pivot point, trend and/or trading channel.
Now, back to the Juniors.
The mining sector appears to be under pressure. Each attempt to rally is being thwarted.
Compressed view of the channel, below.
The Fed announcement at 2:00 p.m., EST tomorrow, may or may not have any material effect. The sector may just continue lower …. slowly, without much fanfare (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.
So, how’s any business going to operate profitably in an environment that’s systematically being disrupted?
Those that could come up with a plan (for their company or business) in such an environment, i.e., the ‘competent‘, are leaving in droves; letting the slackers, back-biters, corporate gossips, and the incompetent, finally have free rein.
This phenomenon likely applies to all major businesses. We already see the entrenchment.
Then, The Fed
Then, there’s the Fed. Surely, when they see how bad things are, they’ll lower rates; Right?
‘When the Fed realizes the economy’s in a recession, they’re going to lower rates‘.
That’s ‘normalcy bias’. We’re in a new construct: There’s no Fed ‘pivot’, rate lowering, or any ‘accommodation’ in sight.
On top of that, some have figured out, things aren’t quite right at the Fed; looks like different ‘forces’ are at work.
Go to time stamp 10:50 at this link (warning, contains profanity).
Then, The ‘Stackers’
So, we’ve gone from stacking toilet paper to stacking what’s thought to be precious metals.
First, it’s fake silver … and then, even the Perth Mint got into the act with ‘diluted’ gold bars.
As stated, years ago, during the Texas Freeze, when it really hits, the grid goes down, nothing’s working, it’s freezing outside, precious metals are nowhere on the list (not advice, not a recommendation).
Then, The VIX
As if all of the above was not giving us clues that something’s about to happen, there’s the VIX.
If you believe the talking heads and ‘finance’ YouTube sites that claim the debt deal will cause massive inflation, well then, let’s pose the following question.
If that was true, why are gold and silver not responding in a huge bull market with upward leaps (a la 1995, S&P) each day, then week and month?
Those close to the market always know something; their actions show up on the tape.
It could be we’ve already past the top in spending …. just by market pressures alone. It’s possible, all that extra allocated ‘pork’ may never get implemented (not advice, not a recommendation).
Lastly, The Miners
The miners GDX, GDXJ, have been in a bear market for years with all-time highs (GDXJ) during the first half of 2011.
Since then, the sector is down over 72%
It’s interesting, that this high stress, physically demanding industry with risk of danger ever present (here, here and here) reached a bear market peak in mid-2020, just as certain ‘items’ were being mandated.
Junior Miners GDXJ, Daily
As the competent leave the general workforce, would the resulting lack of accountability make itself known first in professions where stupidity causes direct effect in reduced production and/or increased accidents?
The GDXJ is at an interesting juncture.
It’s currently under resistance (blue line) that has already been tested.
At the end of the session today, we’re a Fibonacci 8-Days from the low set on May 25th.
If the index is going to reverse lower from here, this is a likely place to start.
Another attempt at resistance would indicate more upside pressure than anticipated; any existing short positions would be closed (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 ‘Artificial Intelligence’ (AI) clown show’s in full swing with a ‘predicted‘ single quarter target of $11-Billion, from NVDA.
That’s not to be confused with the budget clown show just ended in Washinton D.C.
And where does that leave Tesla? They seem to be left out of the latest round of cult-like insanity.
Back in the day, Dr. Alexander Elder stated, professionals don’t look for the ‘challenge’ in the markets (trying to figure out the NVDA, top), they look for the ‘money’ … there’s a huge difference.
Junior Miners GDXJ, Weekly Candle
As of 12:35 p.m., EST, from a technical perspective, even though we’re up for the day (so far), MACD momentum’s increasing to the downside (magenta arrow).
Nobody seems to be paying attention to gold and silver; all eyes are focused on the next shiny object.
Pulling out a bit farther on the weekly, there’s no question we’re in a channel.
The question is, are we (GDXJ) going to say in that channel or reverse from here?
The last update said we’d likely be testing the wedge break and that’s what’s happening.
A ‘test’ will take however long is needed. It’s either pass or fail. Pass in this case is resumption to the downside.
Technical conditions (MACD, wedge break) favor the downside (not advice, not a recommendation).
In addition, we need to keep in mind there’s a new circus in town; the miners may be well on their way to more downside before anyone steps out of the big-top to notice.
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® 