SPX S&P 500 Daily Chart; H&S; Fibonacci Retracements; Tech Stocks Sell Off after KOSPI (South Korea) Crashes -10%

 

Don’t you love the smell of napalm in the morning? ApocalypseNow. Pull back your units boys, we’re gonna light it up like a birthday cake. You know, folks, some day this stock market is going to end. That chopper sound echoes in your mind.

The Monday session was interesting with stocks popping and running higher after the Juneteenth holiday weekend when the bruthas were beatin’ on those skins. Oil prices drop on better news from the Iran War and Strait of Hormuz but instead of stocks rallying on the prospect of lower gasoline and fuel costs, they rolled over and sold off.

The chips are down, literally and figuratively. The tech stocks are causing the weakness in the broad stock market and trouble started in Asia overnight. The KOSPI (South Korea) crashes -10%. The problem there is that Samsung and SK Hynix make up almost the entire index; only two stocks! In addition, Kospi just allowed leveraged ETF’s to trade and this attracts hot money including leveraged retail traders (Joe Sixpack). It was fun on the way up but now that tech appears extended, the downside can be ugly. The NIKK (Japan) dumps -3.6%

Maybe the AI bubble is popping like the dotcom bubble in 1999-2000? The SOX is down -6.3%. SMH -5.6%. XSD -5.1%. NVDA -2.6%. MRVL -7.3%. MU -10%. AMD -5.3%. CAT -4.5% (builds data centers). It is a tech bloodbath. IBM bucks the trend up +4% today. Favorite flavor SpaceX, SPCX, has crashed -34% in the last 4 days, after it printed the top, and the market makers are trying to hold the price at 150 and higher.

At the same time, Doctor Copper is puking on his shoes, so he is placed on a gurney and rolled into the emergency room to try and keep him breathing.

Adding more bad news on top of the pile of crony capitalism pig slop, the private credit problems continue due to their exposure to the software sector that is in the toilet bowl. Investors got into instruments for the long-term that place limits on withdraws. Now they want their money back faster because the markets look shaky but they cannot get the dough out fast enough. There is always some type of credit problem when a major stock market top occurs.

Technically, the above chart looks like a bowl of spaghetti. Price comes down to 7348 to test the 50-day MA support at 7340. The SPX has to make a bounce or die decision from here. The lower standard deviation band at 7299 is in play.

The blue lines show the Fibonacci retracements for the big rally that ran from April to the start of June. The 38% Fib retracement is 7121-ish and the 50% Fib is 6972.

The red lines show the H&S pattern in play. The 7621 is the head and the neckline is at 7370. That is a 251 point difference so subtracting that from the 7370 is 7119 a downside target if the 7370 gives way. You can also call the neckline at 73 hundo where that dip occurred a couple weeks ago. That targets 6979 if the 7300 fails. Thus, mathematicians say thus a lot, that is why pretty Emily, the office administrative assistant, did not invite Keystone to the weekend party, the H&S targets and Fib retracement targets gel together at the 6970-7120 area. That appears a logical downside target to look for in the near term. The 100-day MA is 7051 and it typically acts as strong support when equities begin falling apart.

The red lines for the chart indicators are sloping lower (weak and bleak) except for the histogram and stochastics, however, price has not made a matching low compared to two weeks ago so it is a moot point for now. The RSI dips its toe into bear territory at sub 50%. Watch to see if the stochastics do the same. The MACD and money flow clearly show that they want to see some lower lows in price ahead on the daily basis.

The day is young. Of course, watch the chip and tech stocks but also pay attention to copper and volatility. For the bears to begin carnage, they will need copper to remain weak and getting weaker and the VIX to run above 20 and higher. Pay attention to the banking sector and the impact of the ongoing private credit withdrawal drama. Last week it was Palisades Park and hugging and kissing the pretty girls in the Tunnel of Love, but this week it is the End of the World as we know it. Look at how fantastic and fun the world was without those garbage smartphones. I feel fine. Everybody sing. It’s the end of the world as we know it, and I feel fine. 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.