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Intraday Flash - SOX

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Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Our October 14th note suggested that the SOX had restarted its bearish larger degree trend from the Q1:04 peaks owing to the "5" waves down that could be seen from the peaks on 10/4. Such an impulsive move strongly suggested that the trend had indeed reversed from the September lows bounce the SOX had seen.

Yesterday's and today's bounce in the SOX, after this completed impulse wave down from the 10/4 peaks to the 10/18 lows, has carried back to important Fibonacci resistance (388-400), is showing some short term momentum divergences, and has a valid hourly Demark trend exhaustion sell signal. Though another down-up sequence in the price pattern is possible, at this stage, we can consider the corrective mean-reverting bounce in the SOX over the last two sessions to be more than 90% complete, and possibly even 100% complete depending on if/how the index falls from current levels.

As a result, the risk/reward appears to favor a move to the downside. A move above 410, a previous wave 2 peak from 10/7 would negate this bearish view and lead us to stand aside . The analysis suggests the next big move for the SOX index appears to be down toward 327 and then 310, with more bearish potential thereafter (not advice).

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