10/24/19: SOXX Force Index, Pivot Lower
The October 18th update for the SOXX detailed a nascent reversal. Three trading days later, we may have a ‘gut-check’ of that pivot.
Pre-market activity in the SOXX (and 3X inverse SOXS) shows a test of resistance in SOXX and corresponding support in SOXS.
The Force Index detail shows a similar set-up to the GDXJ, covered in the October 15th update. The magenta force numbers show a weakening of upward thrust.
There are bearish divergences in both the weekly and daily MACD (Weekly not shown in 10/18, update), so this reversal if it continues, may be significant.
Either way, this is the danger point where the risk is least.
9:23 a.m. EST
The semiconductor ETF appears to be in early stages of reversal.
Note the terminating wedge that has formed over the past six months. Within the last few days we have a nascent up-thrust.
Charts by StockCharts
7/31/19: 12:32 p.m. EST SOXX To Test Higher?
It’s about 90-minutes before the Fed announcement and SOXX is in spring position.
Last update posed that SOXX would test the all-time highs; Looks ready.
Springs and up-thrusts can fail. However, SOXX momentum (weekly MACD) is still posting higher. Probabilities favor some kind of test.
Semiconductors Test And Reverse?
12:11 p.m., EST
The monthly chart of the semiconductor index (SOXX as proxy) shows potential for violent downside action.
Massive downward thrusts indicate SOXX may be under distribution … even as the index makes new highs.
The last session had SOXX in a breakout to new highs that maintained the upward advance nearly to the close.
Today is a different story. A gap lower open and then (currently) a struggle to maintain upward momentum.
The monthly chart shows the up-thrust and then test. It’s rare but possible the test actually occurs at a higher level. The Wyckoff training materials available at this link, have at least one example of a test lower during a spring set-up.
Just reverse the conditions for up-thrust and one has the test posting just past the previous up-thrust.
SOXX inverse fund with high liquidity is (3X inverse) SOXS.
SOX in Danger.
The weekly chart shows a clear spring to up‑thrust set up.
Note how little progress was made in the past week to make a new high. The index barely budged above the high posted from the previous week.
While all eyes are focused on the S&P, attempting to analyze every squiggle, other indices such as the SOX are showing a clear set-up.
There is of course no guarantee of a reversal from this point. The set-up only identifies the potential for a trend change.