SOX Semiconductors Weekly Chart Sideways Symmetrical Triangle

The socks were very weak yesterday on downgrades of MU and VECO and weakness in many chip plays such as AMD and INTC. Technology is a main driver of the overall economy, if tech is happy so are the markets, if tech is sad, the markets sell off.  Weak semi's will create tech weakness. If AAPL gives up the ghost, the tech sector will be beaten severely. The pink line is the 395.43 level which is of great interest to Keystone's algorithm, Keybot the Quant. Weakness in the broad indexes will remain in place as long as price stays under 395. The weekly chart is a textbook sideways symmetrical triangle.  Over the last two years there was always a central banker there to pick the socks up off the floor. Each time price threatens the lower trend line failure, Uncle Ben or Uncle Mario come to the rescue.

Price tested the 200-week MA intraweek in July as the ECB's Draghi said he would support the euro by whatever means necessary (tiny circle). Look at the bounce, from 350-ish to 410-ish in only four weeks following the Draghi promise, a 17% move.  Remember, this is not the sign of a strong economy, but instead more money-pumping creating faux markets moving forward. The positive divergence green lines created the bounce off the bottom trend line; the negative divergence red lines created the spank down over the last few days. Overall, the indicators are showing the sideways preference moving forward.  The moving average lines are moving out sideways as well.  As the triangle squeezes in, price is going to decide a direction in the coming weeks. The veritcal side of the triangle is a large 150 handles. When price decides on direction, the ramifications are serious in either direction.  A break up and out of the triangle at 405 would target 550 signaling wildly bullish markets ahead for the next couple years.  A break down and out of the triangle at 360-ish would target the low 200's and dire times for all global citizens ahead.

The most interesting aspect of this chart is the red square area which shows the false breakout to the upside earlier this year.  Sideways triangles can be used in technical analysis for any stock, index or ticker across any time frame. Typically, false breakouts will occur, either out the top side (like the chart above), or out the bottom side, about two-thirds of the way thru the entire distance of the sideways triangle.  Check.  What this false break out leads to many times is price returning to the inside of the triangle, and then a move out the opposite side which is the actual breakout direction.  Thus, watch this chart closely for the weeks ahead since the false upward breakout hints that price will eventually collapse out the bottom.  The 20-week MA under the 50 MA is bearish.  Price under the 50 MA is bearish and watch to see if price drops under the 20 MA which would be very bearish.  Watch the RSI 50% level, bulls are happy if it moves above, bears are happy if it stays below 50%. Projection is sideways with a downward bias moving forward with an eventually bottom rail failure occurring. 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.