SMH Semiconductor ETF Weekly Chart; Oversold; Rising Wedge; Negative Divergence; Upper Band Violation; PriceExtended

The SMH is the semiconductor ETF. The SOX chart was posted the other day and the SMH, SOX and XSD charts and technical analysis is basically all the same. Chips ahoy! The semi's launch higher this year riding the covid virus wave and with more waves of pandemic misery on the way, surf's up! When the country was in lockdown, companies flocked to ZM and other platforms to conduct business via video conferencing. People spend stimulus money on worthless Scamazon products sending AMZN to the moon. There is an immediate greater need for technology in business, teaching, learning, meeting, talking and shopping applications and more.. Folks are sequestered at home.

Einstein traders then surmise that all that technology needs chips; and that is correct. In March, investors begin tripping over each other to buy the chips. SMH catapults from 95 to 190 a huge +100% gain; a double. Birds are singing. Harps are playing. Dogs and cats are living together in harmony. However, if business is slow and employees are sh*t-canned, those workers are no longer on Zoom, they are not shopping as much on Scamazon, they are ignoring app and other offerings from Sapple, you get the idea.

People forget about recessions as the years move forward and instead base their future plans on what is happening in the present. That is the mistake individuals and businesses make all the time. Garbage in, garbage out. You have to picture an economy with a lot of people out of work and the people still employed being told to sit in their cubicle and work or they are next out the door. When folks are unemployed, are they going to buy new 5G iPhones for over a grand from Apple that only performs like your existing smartphone since the 5G infrastructure is not in place? Sapple thinks you plan to since they are cranking-out 80 million or more of those puppies right now ready for your Christmas stocking that has holes in it. Products and services fall off in a recession as budgets tighten. Next month, folks will say the chips are down, figuratively and literally.

SMH is overbot with neggie d across all the indicators; she's topping-out right now on the weekly. If you pull up the XSD you can see the MACD a hair higher so the bulls are trying to extend the top but that would only be a week or so. The chips are in prime shape to top here and begin a multi-week down move.

Price has tagged the upper band so the middle band at 165 and lower band at 142, both rising, are on the table. Price is extended above the moving averages requiring a mean revision lower. The Aroon lines are maximum possible euphoric bullishness; it is impossible for SMH to become anymore bullish (sentiment-wise). There's nowhere to go but down. The ADX shows that the move up is a strong trend (pink box) so that is the one metric the bears will have to roll over to the downside but it usually lags slightly. Everything else on the chart is bearish.

Semi's received the latest thrust higher on some deal-making. XLNX exploded higher two weeks ago. With the pandemic increasing again, there may be a further run into chips but many investors have already placed hefty long positions willing to hold a long time. Semi's fall super sharp and fast when they give up the ghost and the rising wedge says that fall off the cliff is coming anytime. Keystone has been scaling into semiconductor shorts. If you enjoy big profits on the chips, even little ones, scale-out going forward. The drop in March was from 155 to 95, a -40% flush in only 5 weeks. The jury is out on the monthly charts that may be open to price coming back up again after the multi-week selloff. There will be time to study that later. 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.