SOX Semiconductors ETF Daily Chart; Chips a Whisker Away from a New All-Time Record High; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

The chips lead the broad stock market higher on Thursday, 3/21/19. MU +9.6%. AVGO +2%. INTC +1.5%. QCOM +1.1%. NVDA +5.5%. XSD +3%. SMH +3.5%. AMD and XLNX are also notable chip stocks. The SOX gains +3.5% and is up +3.6% this week. The central banks have truly blessed us with happy days forever. The SOX closes at 1441.83, the 1441 palindrome, 4 points shy of the all-time closing high at 1445.90 from 3/12/18 (one year ago). The SOX prints a HOD at 1450.76 only 15 points from the all-time high at 1464.61 on 3/13/18. Watch the semi's closely to see if the SOX takes out the all-time highs, or, if the chips crumble.

The tight standard deviation lines (pink arrows) squeeze out a big upside move for the chips this month. The tight bands in late September early October sent the SOX sharply south exacerbating the Q4 collapse in the broad stock market. Interestingly, note how SOX had topped out last March well ahead of the broad market. Recall that Keystone was explaining the sideways symmetrical triangle as it evolved,and resolved lower.

Chips bounce off the possie d bottom to begin the year (green lines). It's a rocket launch with traders tripping over each other to buy semiconductor stocks at the ask. A stutter-step occurs in February but the party continues this month. The indicators show negative divergence which will want to send the chips lower for several days forward. The upper band is violated so the middle band at 1366, and rising, is on the table.

If the SOX can squeeze out a new all-time record high, that may excite the robots enough to extend the top for a few more days, otherwise, a reversal in SOX will likely occur on this daily basis and price may seek that middle band for starters.

The daily chart above hints at a top for the SOX anytime over the next one to three days, then down for a few days, but a recovery then occurs back up to matching and higher highs, perhaps a new all-time high. SOX should come up again because of the long and strong RSI and MACD line on the SOX weekly chart.

However, other indicators such as the stochastics are overbot and negatively diverged on the weekly chart. With this current matching price high compared to a year ago (close enough for government work), the chart indicators on the weekly chart are all neggie d for that time period. Thus, there is near-term momentum but the chips may be running out of gas. A guess would be that SOX tops out on a weekly basis in April say early to mid-April. This may be extended if the new all-time highs occur. Once the chips top out in April, they should trend lower for many weeks forward (it will be a high on a weekly basis). This year is hinting that the "Sell in May and Go Away" philosophy for the chips and the stock market may hold water. Keystone does not currently hold any chip positions long or short. 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 on Saturday Morning, 3/23/19: On Friday, the chips are down. The SOX retreats 41 points, -2.9%, to 1400. The new all-time highs will have to wait.