In addition to the macro work done in NFTRH 922, I’d like to do micro work on some sectors going forward. Let’s start with the Semiconductor sector, our long-time leading indication, which is positive (along with other sectors) in pre-market and in line with our plan for very short-term upside in markets.
The plan is on watch for this broad market bounce in the short-term, and then for it to peter out and resolve to the downside. If that view is correct, we should keep a close eye on the Semi sector, as the leader.
SMH is currently indicated to open at 609 in pre-market, well above last week’s close. This after testing the 50 day moving average for the first time during the manic portion of the rally (post-March). That is theoretically a positive, though this update presents a negative view on balance.
RSI is on a negative divergence to recent price highs, and has ticked to negative (below 50). MACD is positive but in a rollover dome.
I have added two more indicators to the chart. One is distance from the 52 week high, and that has declined to the degree it did last time prior to a shot to a new price high.
The other is Money Flow Index (MFI), which is basically RSI plus volume dynamics. It too is on a significant negative divergence to SMH price.
Volume is portraying distribution. I could envision that every time recently when the machines have sold, the public – hopped up on AI/Semi – has bought the dip.
I don’t have much left that is Semi related, but if I did I’d be selling it now (after selling ALAB and ASML a bit too soon and others far too soon).
What’s more, I may get stupid and try shorting SMH or INTC on this morning’s bump up into resistance. I won’t advise on shorting a furious bull market until it rolls over into clear setups. But I will advise that taking profit is legal. So is keeping cash.
