Thursday, November 14, 2013

SOX Semiconductors Weekly Chart Sideways Symmetrical Triangle Rising Wedge Overbot Negative Divergence

Semiconductors will likely gain importance moving forward. Tech may be challenged today due to CSCO's dire forecasts and commentary. CEO Chambers is a good egg that always provides direct commentary. When it is bullish everyone is happy, when it is bearish everyone calls for his resignation and forced retirement. Chambers sees an economic slowdown globally especially in emerging markets. Other nations are depending on the U.S. to grow and help them but watch the Washington, D.C. follies in horror. He says the weakness is not only high tech but across all sectors that his customers represent. A chip goes into just about any product you buy nowadays so the semi's are a key market bellwether. The SOX, and SMH, enjoy a steady run higher but price now moves up into a rising wedge with overbot conditions and negative divergence.

Looking back, you can remember the sideways symmetrical triangle pattern that was highlighted as it developed all through 2012, then resulted in the leap higher when the year began with the political budget resolution (which only was another can-kicking decision). The vertical sides of the triangle are about 150 handles, sometimes this is more of an art instead of a science, especially for a 3-year pattern, so the breakout from the 370-390 area targets 520-540. Price is at 508. The 80/20 guideline says 8's lead to 2's so 508 would hint at 510, and the break up through 480 hints at 520. Note how price is above the 20 MA above the 50 MA above the 200 MA, stretched, and a mean reversion is on the table (lower prices). Projection is for sideways to sideways lower moving forward towards the 480's. If price prints the 520, a reversal would be expected. Semi's are an attractive short play moving forward. SSG is a double X inverse ETF that is thinly-traded but that should be a very attractive opportunity as a long play as the days move forward. Lower semi's would indicate a slackening global economy. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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