SOX Semiconductors Weekly Chart; Overbot; Rising Wedge; Negative Divergence; SOX Prints All-Time Record High This Week

Investors and traders keep believing in the chips as evidenced by the dip-buyers buying each pullback in the semi's. The stochastics are overbot but the RSI is not, although it was overbot at the April peak. Chips will be in trouble if the SOX falls below that red trend line. The red rising wedge vibe is bearish. The red lines show negative divergence across all indicators. The MACD has a little bit of near-term upside juice so price may jog, one week down, the next week up, to form the top at that time.

The SOX prints an all-time record high on Tuesday, 10/15/19, at 1629.53 and new all-time record closing high at 1625.69. SOX is at 1607 above 16 hundo.

The ADX shows that the big upside rally in 2017 into early 2018 was a very strong trend higher (purple box) but that petered out in March 2018. The chips rolled over to the downside in 2018 and the wheels fell off the cart at the end of last year into early this year. That was when, on 1/3/19, as Keystone had described at the time, the central banks colluded and orchestrated the huge rally and upside joy in 2019. Stocks were falling down the rabbit hole and ready to collapse and take out the Christmas Eve low. If that would have happened in early January, and it was happening, the stock market could have went into a crash. Fed Chairman Powell got religion and the global central banks (Fed, ECB, BOJ, BOE, PBOC, etc...) started announcing many stimulus plans at 2 to 3-day intervals through January and February that pumps equities higher to today's levels.

The ADX was just starting to show that the downside move into January of this year was a very strong trend but boom, the central bankers closed the door and goosed equities higher always protecting the wealthy elite class that own large stock portfolios. Despite the humongous run higher this year in the SOX, the ADX does not consider the rallya strong trend.

The Aroon green line is pegged at the maximum 1 hundo with nowhere to go but down. The Aroon red line was recently at zero with nowhere to go but up and that goes for its low 20 value now. Look for the potential negative Aroon cross going forward. The upper band at 1652 has to be respected but the chart is in weak shape with the neggie d showing that the fuel has run out.

Semiconductor companies such as NVDA goosed the chip indexes higher this week but they are likely on borrowed time. The SOX, XSD and SMH chip indexes charts are similar and rhyme with the analysis above. Look at SMH as a short now. Keystone is not in the chips right now but will be looking for potential short entries into SMH and XSD going forward. SSG is a 2x short semi ETF and a potential long play going forward although it is thinly traded. As would be expected, SSG is printing a low, in oblivion as chips print record highs. The SSG weekly chart is set up with oversold conditions, a falling wedge and positive divergence across all indicators (a mirror image of above) so that looks like a nice little long trade to play the chips short.

If you are a young person buying chip stocks, bragging at the office water cooler, thinking that you cannot go wrong, well, you are. It would be wiser to exit the chip longs stage right and/or short them going forward, otherwise you will look foolish at the office water cooler come the holidays. 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 Saturday Morning, 10/26/19:  SOX prints another record all-time high at 1650.20 up +3.7% this week to 1649 a record closing high. The chips (a belief in technology) and banks (steeper yield curve) carry the stock market towards new all-time record highs.