Take a look at the red line in this chart. It's the relative performance of SMH as compared to SPX. The green line is MFI.
Note how each time this line starts to nosedive, and the move is confirmed by MFI, it's lead to further weakness in SMH, and more often than not, it marks a top in the index as well.
SMH is now bumping up against the 1.618 extension from the Oct '18, May '19, and Aug '19 selloffs. In fact for the past month SMH has hardly gone anywhere despite the media's rhetoric that the indices are rallying on "trade hopes". Chips are saying otherwise as they've been rangebound awaiting trade resolution.
However, the fact that the red line is tanking again, AND is supported by a corresponding dive in MFI, as well as the recent threats of retaliation from the chinese makes me feel like a downturn is imminent. My guess is given the extreme overbought conditions this also likely spells trouble for the broader markets. Seems to line up w/ a scheduled uptick in volatility from my SPX Gann chart.
Most chip stocks appear ripe for the picking. Short away.
Note how each time this line starts to nosedive, and the move is confirmed by MFI, it's lead to further weakness in SMH, and more often than not, it marks a top in the index as well.
SMH is now bumping up against the 1.618 extension from the Oct '18, May '19, and Aug '19 selloffs. In fact for the past month SMH has hardly gone anywhere despite the media's rhetoric that the indices are rallying on "trade hopes". Chips are saying otherwise as they've been rangebound awaiting trade resolution.
However, the fact that the red line is tanking again, AND is supported by a corresponding dive in MFI, as well as the recent threats of retaliation from the chinese makes me feel like a downturn is imminent. My guess is given the extreme overbought conditions this also likely spells trouble for the broader markets. Seems to line up w/ a scheduled uptick in volatility from my SPX Gann chart.
Most chip stocks appear ripe for the picking. Short away.
