Semis on Edge:

As technology is most likely in a position where it will be “impossible to catch” (insert famous Secretariat call as the horse hit the turn well out in front at Belmont Stakes in 1973 to win the Triple Crown) from the top 3 major S&P sectors on a YTD basis up 30%, will it back up enough into year-end to let other lagging groups make up ground? A lot of that will depend on the semiconductors inside the diverse space and below is the chart making the argument that its recent decline could accelerate. It is the WEEKLY chart of the SMH which is now 12% off its peak made in early August after a rough double top near the 160 level. Notice there was a precipitous drop from that area in late 2021 with 2 WEEKLY bearish engulfing candles and then an even star pattern completed the first week of 2022. There are some similarities with a bearish engulfing candle the week ending 8/4 and then another the week ending 9/8 that started a bearish 3 black crows formation. Notice as well that on the bottom of the chart the ADX signal line has begun to slope heavily lower and may record a bearish cross if that red line turns above the green. When did that last occur? You guessed it to start 2022 when the ETF rolled over and did not stop for almost a year.

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