SOX Semiconductors Index and NVDA NVIDIA Weekly Charts; Overbot; Rising Wedges; Negative Divergence; Upper Band Violations; Prices Extended

The semiconductors print a higher high on the weekly chart with all the indicators in negative divergence. Over the coming weeks, traders will opine about how the 'chips are down'. The SOX weekly chart is coming off overbot levels. The red lines show the neggie d in play; price is out of gas. The lower pink band was violated and pierced in the March selloff so price recovered to the middle band then to the upper band albeit briefly intraweek at the end of August. The middle band is now in play at 2079.

Price is extended above the moving averages requiring a mean reversion lower. The red rising wedge is a bearish pattern. The Aroon green line is overbot and the red line oversold both will move towards the middle as time proceeds which is bearish.

The same analysis holds true for NVDA one of the stars of the chip sector. NVIDIA is at the end of the line now, however. Its weekly chart is in negative divergence so a spankdown is on tap on the weekly basis. The same analysis holds for SMH and XSD.

The monthly charts are interesting showing neggie d across the indicators except for the MACD that has taken off vertically. The MACD readings are at record highs and have nowhere to go but down. This tells you that the multi-week and multi-month, perhaps multi-year top is in for the chips. The multi-week top is definitely in play now for October perhaps into November. If the MACD on the monthly can influence some additional upside in the semi's, that would only lead to a double-top in price occurring, say in November or December, perhaps early January, and that would be the multi-week, multi-month and perhaps multi-year top for the semiconductors.

All you young folks that have bot into the chip hype, literally, better think twice. Otherwise, you will lose a lot of money over the coming weeks and months and couple years if you planned to dumbly hold positions. Of course there is a chip in virtually every product you buy nowadays, but investors and traders have realized and traded on this fact for the last 20 years and more. Did you just come to this realization and is that is why you bot chip stocks? People are at home more due to covid so traders rush into chip stocks but how many chips do you really need? You even get sick of potato chips after you eat too many.

Keystone bot the SSG ETF yesterday which has been beaten to a pulp. This is the 2x inverse ETF for the chip sector. The USD ETF is the 2x long for ETF for the chips (do not confuse that symbol with the US Dollar Index) so that can be shorted going forward. There are lots of plays available. Short the chip indexes, ETF's or individual stocks. Keystone will likely cycle in and out of SSG, even though it is thinly traded, for the coming weeks. In general, short the rallies in chips going forward. If you have enjoyed big profits in chips over the last couple or few years, start scaling out of these long semiconductor positions over the next month or as it fits within your EOY tax strategies. 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.