Monday, December 30, 2013

SOX Semiconductors Weekly Chart Overbot Rising Wedges Negative Divergence Price Extended

A couple weeks ago the purple rising wedge appeared golden, with price unlikely to surpass 520 and to instead start to work lower. However, price jumps higher as the light volume Santa Claus rally rolls along now tagging 532. Traders are convinced that financials will lead markets higher in 2014 and tech and financials go hand and hand. Also, traders figure that smart phone and other gadget sales will continue in full force in 2014 requiring more chips. Everyone is feeling optimistic. The SOX and SMH charts do not agree with this hypothesis. Price may jog from 1 to 3 weeks but the chart is in a topping formation. Ditto the daily chart. Price is far extended above the moving averages requiring a mean reversion.

Keystone has an ongoing position in SSG and just opened another long position in another account. SSG is the double X inverse ETF that goes up if semiconductors go down. SSG is thinly-traded so that must be considered. Projection is for semiconductors to move sideways to sideways lower moving forward. 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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