Worn Out “Socks”:
The semis have been lagging and will there be some more softness before things get better? The MONTHLY chart of the SOXX below displays some exhaustion candles, notably the doji in August which had a nearly 50 handle range top to bottom. That is indicative of toppy action with very volatile behavior. The WEEKLY chart confirms this theory with 5 of the last 9 weeks moving up or down more than 9% on a CLOSING basis (three up and two down), right after the bearish shooting star candle the week ending 7/12 at all-time highs. There is a real tug-of-war going on beneath the surface. The ETF is now right on the arbitrary definition of a bear market down nearly 20% from that mid-July peak. Notice too on the WEEKLY chart the back-to-back touches of the 50 MONTH SMA in early August and September, too soon in my opinion as this should have launched off this secular line like it did last October with a bullish engulfing candle (only other touch of the line since Q1 2023). The technical damage still needs to be worn off and top holding plays in AVGO and NVDA which make up 20% of the fund are floundering a bit (NVDA and AVGO making lower highs since June). With the IGV holding the baton (we wrote about this in our 7/8 Technology Note) in tech as the semis try to get their act together, they recorded a bearish dark cloud cover and doji candle 2 of the last 3 days. The semis need to step up here.