SOX Semiconductors 15-Minute Chart

QCOM, a big-time fave of long traders this year, is under investigation in China which collapses the stock at Monday's opening bell sending the SOX sharply lower as the red candlesticks show above. QCOM, and the semi's in general, recovered as the day moved along. Semiconductors are a major influence on markets currently. A chip is required for just about any product manufactured these days so a slowdown or other turmoil in chip land would forecast trouble for the broader markets. The rising wedge, overbot conditions and negative divergence created the spank down for yesterday morning, QCOM was simply a catalyst. Price recovered yesterday afternoon for a matching high, however, the indicators remain negatively diverged and created the late-day spank down. Note that price recovered in the final minutes to back kiss the lower trend line. The SOX has to either bounce, to return above the trend line, or die, collapsing lower, at the opening bell.

The sideways channel at 501-505 is important and the winner is identified by whichever side price exits; bulls win above 505, bears win below 501, the fight continues at 501-505. If 501 fails, price will test the thick red line, identified by Keystone's trading algorithm, Keybot the Quant, at SOX 498.52. This is a bull-bear line in the sand and if violated to the downside, the broader market will sell off. SOX gapped-up 3 days ago so price may want to venture lower to fill and explore that gap at 496-497. Keep your eye on the socks moving forward. The sock hanging above the fireplace for Christmas will either be filled with gifts to make for happy bulls, or, coal, which makes for happy bears. 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.