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SOX Intraday Flash



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


Given the leading indicator tendencies of the Semiconductor sector (for both the economic cycle as well as investors' willingness to take risk (beta, valuation, etc.), we thought we'd focus on the SOX index from the January top and put together the bull and bear interpretation of the technical pattern. Net/net, a case can be made for both the bull or the bear case in the intermediate term (multi-week time frame). The most bullish aspect of the move down from the January lows is the apparent overlapping aspect of the price pattern. However, a valid interpretation of that price record can be made that suggests a clean impulse down can be seen. The short term bounce we have seen from the 5/3 lows has traced out a clean 5 waves up to 5/11, a clean 3 waves down from 5/11 to 5/17, and is now in the process of tracing out another clean 5 wave move up off the 5/17 lows that projects to the 479 area (+/- 2 points). If the bullish case is operative and the 5/3 lows were the end of the correction from the January highs (and no clear Elliott wave pattern suggests as much so far), then prices will move cleanly above 479 on their way toward 500+. If the 479 price level acts as important resistance, then a move lower below 433 becomes the most probable scenario. For now, the move off the 5/17 lows does not look complete: a wave iii high may have been put in today that needs one more down-up sequence before a 5th wave (hopefully with momentum non-confirmations) potentially completes. Once the 479 area comes into view and a more complete 5th wave off the 5/17 lows can be seen, a clearer setup may present itself. If it does, we'll highlight it here.

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