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Sweaty SOX!



Toddo referred to the SOX chart earlier, which refers to the PHLX Semiconductor Index. I wanted to point out some important technical levels associated with the chart, which may visually explain what has been put in words.

The SOX index has set up a potential reversal pattern called the "head and shoulders." While many traders see it and potentially act on it looking for an edge, it is very important to remember that the pattern is only valid if it is confirmed by a breakdown below the neckline, which has yet to happen. Until then, it only "looks" like a head and shoulders pattern.

The 330 level is the resistance level of the shoulders. That is being tested now. A break above those levels basically disproves the pattern itself, but also indicates a retest of the early December levels.

Exhibit 1 - SOX near important levels

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