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Advanced Technical Analysis - SOX update



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.


The SOX has now moved back to the 400-405 support area I identified on Monday. The very short term is a touch unclear: specifically if another up-down sequence is necessary for the SOX that takes prices slightly below the 400 level before a good bottom is formed. It is possible too that the low the SOX made at the close yesterday or any slight new low today could be the bottom of the wave B or wave 2 bottom. Either way, several bottoming indicators have registered including short term momentum divergences and Demark trend exhaustion indicators, suggesting that this area of 400-405 could substantially hold the SOX's decline and lead to at least another impulse leg up toward the next area of resistance in the 430-450 area.

Only a move below last week's low of 390 would suggest a more defensive stance. The analysis suggests that should levels continue to decline through 390, the larger trend down still has some room to play out on the downside. I still believe however, that a move into the 430-450 range is the next most probable move (not advice). What happens as prices approach that area will help me determine just how sustainable the bounce is.

No positions in stocks mentioned.

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