“Stretching” The Imagination:   

Unless one has been living under a rock for the last couple of quarters everyone knows how parabolic some of the semiconductors have gone. NVDA Friday came within less than 3% of touching the very round 1000 number (recording a bearish engulfing candle CLOSING 100 handles off intraday highs), and since the first week of 2024 recorded a doji candle right at the very round 500 number it almost doubled (this week did record a bearish shooting star). SMCI one-upped Nvidia is now on a 10-week win streak and it has advanced 300% in 2024 thus far and the volume expansion during this spurt is nothing short of fantastic. Looking at software some of the big names recorded some hiccups like ADBE and overall if we take a look at the ratio chart here comparing the SOXX to the IGV it is as stretched as it has been in some time. On a YTD basis, the SOXX has advanced 19%, even after Friday’s rocky action, and the IGV is up by “just” 5%. The bearish engulfing candles are somewhat rare (in the boxes) and each time that has occurred there has been a setback although the last one was shallow. Will this be the same this time around? This is not a recommendation to short the semis, but a call that software names may be more attractive here.

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