Sunday, December 15, 2013

SOX Semiconductors Weekly Chart Rising Wedge Overbot Negative Divergence Price Extended

The drama with the socks continues. Over the last 1 to 3 weeks we have been expecting the spank down due to overbot conditions, the red rising wedge and negative divergence across all indicators. Long traders have all their bets placed on financials to lead the markets higher through 2014. Financials and tech are kissin' cousins since the financial and banking industry is perhaps the largest user of technology more than any other sector. Very simply, the broad markets will move higher as long as the semi's move higher. If semi's move lower, equities will move lower. Price fell out of the rising wedge last week but is hanging on to the lower rail of that skinny channel. The collapses out of rising wedges can be quite dramatic so this week will be very interesting for the chips.

Price is extended above the moving averages and needs a reversion to the mean. A move to the 20-day MA at 491.78, and rising, at a minimum would be expected. Keystone's trading algo, Keybot the Quant, is tracking SOX 503.25 as a bull-bear line in the sand. If SOX 503.25 fails, equities are in big trouble, the SPX will lose 1772, and far lower numbers will print moving forward. The bulls must keep SOX above 503.25 or they will lose control. 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.

Note Added 7:45 AM on 12/17/13:  SOX leaps 7 points higher yesterday to 512.15 on news of the LSI deal. The move higher is a back kiss of the lower rail of the wedge. Nothing changes; lower prices are expected moving forward.

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