SMH — All updates

Into the SMH, guys, SMH, as we see, did pull back slightly yesterday. And if you recall from watching trading the close, I've been illustrating this daily, guys. really monitoring what's going on with the SMH because I see the SMH as being the leading indicator for risk on sentiment in the markets.

And what we've analyzed and discussed this declining trend line that you see on the chart is from the all-time highs. We most recently have broken out and extended away from that trend line.

A great breakout. In doing so, we broke out of this longerterm inclining parallel channel. This parallel channel contained price since the liberation day lows back in April of 2025.

So getting out and back above that again near-term bullish double breakout on our hands. Price just has simply gotten jammed up right here at the 618 fib retrace from this decline which is at 607 and 58.

Getting through that would be very bullish near term. So I see any close daily above 60758 that does increase probabilities for SMH to go up and attack the next key resistance level at 635 and84.

So be watching the daily close today. If we close above that key level of resistance 60758.

Now we move on to the SMH index . SMH's performance wasn't bad either . The situation did not look good at first , just as it did with the S&P 500 when we saw a downward gap, then entered a downward accumulation phase, and then came that news which completely turned the tables on the market's momentum and expectations for the whole day.

As you can see, we closed the trade close to closing the gap at the end point. We are seeing a slight decline after trading hours. Now, the resistance level, as you can see here, at the top, is the 618 Fibonacci retracement level from its all- time high to its most recent low .

This level, as I mentioned, is located at 607.58. This level is likely to remain a resistance level in the near term, even if we rise further tomorrow. It will likely take at least 4 to 7 days of accumulation before we start to rise.

However, the bottom line regarding the SMH index today is that it has declined, but not enough to reach the top of this parallel channel, as we saw here in the IXIC index breakout correction bounce.

The index has not yet fully declined, at least to the top of this parallel channel, in order for a rebound on the SMH index to follow.

Now, what could give the Q's in the S SNP 500 more room to run is what's occurring here on the SMH. Just like on the cues, guys, look at this gap up over resistance. Resistance that on Friday was in play.

The top of this old parallel channel and we just gapped up over it. Instead, we actually sold down and caught support on the top of it this morning and then rallied all the way up, pushing through this gap fill from August 17th.

Now, here's where everything gets a little bit more interesting. Actually, before I flip that on, let me highlight the fact of this declining trend line right here that you see from the all-time highs on the SMH back on June 22nd.

Notice how when I drew this, I drew it down to the next pivot. Notice how when price came up again, it attempted to go through, did not close above on the very next attempt, we actually got through.

And then the following day, we didn't succeed in pushing higher, getting extension and away from that declining trend line. So, in turn, price just found its way going right back down. another one day up and then we had three days down.

Now we have three days in consecutive pushing order upward on the chart. This is the first time this has happened since the all-time highs. So right here, this is a big change in character.

We're now starting to confirm a breakout from this declining trend line. Then when I flip over the simple moving averages, guys, the blue is the 50-day moving average. This is the first time as well that we've gotten now two daily candles pushing up consecutively and closing above that 50 simple moving average.

Now guys, what this does is it turns on the buy switch for a lot of other institutions, a lot of which refrain from buying any sort of stock or index until price action can get properly above the 50-day moving average.

Now, there's a couple more moves that are required for more institutions to hop on board, and that would be this yellow 20 moving average that's currently sitting at $55,960. If that were to get above the 50, and then that kickstarts even a bigger rally and push higher up on the SMH.

Now, the SMH is, as you may recall, I've said this is my leading indicator. So, right now, I've got a positive signal telling me that we have a breakout on our hands. Now we watching for tomorrow on the breakout from this inclining parallel channel.

Putting in a daily close higher than today would accomplish that next resistance 60758 from that point. Watch for any sort of uh retraces to the top of the parallel. That could be your buying opportunity to continue with this rally.

But be mindful of these moving averages and the details that I just went over for you on this chart to ensure we remain in bullish uh momentum when you're buying the SMH.

I want to go back to the semiconductor trade though. If you go to SMH, we do have that chart. Once again, just Oh, yeah. I looked at SMH the other day. Let's go look at it right now.

SMH. Yeah, not looking good. Not looking good. In fact, this is definitely in a bearish trend right now. Will it go down further? I don't know. We don't make predictions like that. we can just see what's going on and then trade around that.

Now, it does have some support right here, right? You've got some uh you got a little baby block right here that's providing support, maybe even another uh bullish order block down here.

Um but it's just not got the same move. Right? Back over here when the market was clicking, the sector was clicking, the stocks were clicking. Man, it was easy money. Over here today, not easy money at all.

There are times when there is easy money in the market and then there are times like this where it's been going sideways and that's what we draw the boxes around and it's falling outside the box at this point.

Right? It's been bouncing back and forth inside this box since August 4th. Now it's falling out the bottom under its 50-day. Now it's now squarely in the midst of this blocks area which is the same level that we saw all the way back on June 2nd.

We're into September now. So very frustrating market. Absolutely. just a little bit of a bull back flag pattern that's taking place right now. A little bit of a pullback. If you break below 495, let's say 492, that's when you get a little bit more concern hitting that 50week moving average.

I think that would be your your key area of support. And if not, and we break down, you have bigger problems within the market.

All right, next up into the SMH. We see the SMH on the daily time frame did finish positive. You see this? It was one in the green today. So it was up.1%. We were higher throughout the course of the day, even higher than yesterday's high of the day uh too.

But what did we do? We settled in again right here on this 50% area of the parallel channel. That I remind you too, we tagged precisely on the way down yesterday, bounced up and since have really just settled in right here on top of that 50% area of the parallel.

Normally that's not really good, guys. You want to see a big fall, hit a level of support, and then start producing momentum for a bounce so it can go back up and attack the resistance that's ahead of it.

Instead, we're just lingering right around on top of this uh 50% area of the parallel. Like, if we didn't have the FOMC tomorrow, I would be much more bearish, saying that this price action is actually implying we're going to continue to go down through the 50% area of the parallel.

Now, if that is the case, where would we go? Well, a clear destination would be right down here at the bottom range of this parallel channel right at 509. And if we zoom over here to July 29th, we can see we got very close to that range at 50363.

So, right around 509 to 50363 will be an awful lot of support on the SMH. to the upside. Getting above this declining trend line will be the first test in front of SMH at 555 and 17

I actually think it creates an opportunity in semis. That's where if we go to the Goldman Sachs rotation piece that I keep referring to, we could see that there's been a move into software, which we've been calling for Q3, Q4 move into software. happen.

But that has come almost directly from a move out of semis because there's this belief that oh, we're going to end up seeing a slowdown in AI spending because of the hugging face incident and these calls for regulations.

I think it's complete nonsense. Uh I think the underlying basis that started all this is overblown. uh and it's likely that we have opportunities in front of us now to actually buy some of the hardware exposures that have basically given us some Black Friday pricing.

I want to go back to the semiconductor trade though. If you go to SMH, we do have that chart. Once again, just a little bit of a bull flag pattern that's taking place right now.

A little bit of a pullback. If you break below 495, let's say 492, that's when you get a little bit more concerned hitting that 50week moving average. I think that would be your your key area of support and if not and we break down you have bigger problems within the market.

Next up into the SMH. Now, here's where the story is, guys. And here's where the story, as I remind you, I always, and I've said this many times on this show, this SMH is where I can lean either bullish or bearish on the near-term price action.

And the reason being, SMH contains a lot of semiconductor stocks. They also are growth stocks. So, when investors are pushing these growth stocks up, it's risk on in the marketplace and likely the rest of the market will follow suit.

And I've really been highlighting this with our simple moving averages, guys. So, let's look at these simple moving averages to also illustrate how we're just not able to get back above that 50 moving average.

That 50 daily moving average is this blue line on my screen. The yellow is the 20 and this red down here at the bottom is the 200 moving average. So, we see here even with the pop that we received Friday, price action basically closed right at or underneath that 50-day moving average.

You can even see too we breached it here on the ETH and even maintained above it on the 9th but never put in a continuing confirmation move above not only this parallel not only this declining trend line but then that 50 moving averages.

So we had three resistance levels so far holding SMH down on price and then we slid even further down today catching support mind you at the 50% area of this parallel channel. Now, to remind anybody or to illustrate to any new viewers where this parallel channel comes from, guys, this is a parallel channel back in April of 2025.

And if I zoom in into the 10-minute chart, look at where that bounce occurred today. Right at the 50% area of the parallel, as I illustrated with the S&P 500, the SMH also sold off the last 10-minute candle of the day.

But still incredible how technical analysis can work on the chart. When you're talking about a year and a half, a year and 5 months later down the road, we get an in intraday bounce right here on this 50% area of the parallel.

That tells you near-term guys, that is the level of support. Big fall down here today. I would be surprised um if we don't see a little bit of a bounce up tomorrow. However, if the selling pressure continues pushing us down to the lower 50% of the parallel channel, the next support will come at these low pivots that you see here on the chart, right around $525.

Beyond that, we're talking the bottom of the parallel, right at $58 on the chart there for SMH. Beautiful decline there today, keeping me less bullish in the market for risk on uh stocks, equities, much like the tech sector in general.

The SMH is doing a a W pattern with a higher low, so that looks good. I got these two and I got the SMH on Friday.

It is the SMH fund . Semiconductors perform very well today in comparison. We may be on the verge of achieving an even greater high here at "SMH" . Looking at this chart, we find that the SMH is actually breaking a nice downtrend line upwards.

Guys, if this upward trend continues, we could be heading towards a level closer to $600 in SMH.