Macro: Sandcastle economics
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Technical Update - Sell-off hit Semiconductors and big techs. Small caps gaining
Kim Cramer Larsson
Technical Analyst, Saxo Bank
- S&P 500, Nasdaq 100 and the Semiconductor and Technology sectors formed top and reversal patterns
- Small cap Index Russell 2000 experienced widespread buying lifting the Index (here the Russell 2000 ETF) with almost 4%
Semiconductors Index (illustrated here by the iShares SOXX ETF) formed yesterday a bearish engulfing top and reversal.
RSI divergence has been warning about trend exhaustion. SOXX is likely to test its lower rising trend line and a break below is likely to push SOXX down to support at around 242.59
Companies like Nvidia, TSM and AMAT are big constituents in this ETF
A daily close above Thursday peak at 267.24 is required for SOXX to resume to bullish trend
Nasdaq 100 could be testing its lower rising trendline. A close below is likely leading to further sell-off down to 19,500-19,347
RSI divergence has been warning about trend exhaustion and now the tide could be turning.
To resume uptrend a close above 20,691 is required S&P 500 top and reversal pattern. Contrary to Nasdaq the S&P 500 Index is not showing RSI divergence which suggests S&P could move higher. However, the Bearish Engulfing pattern is a fairly reliable reversal indicator
If closing below its lower rising trend line the support at around 9,447 could come under pressure. A close below could fuel further selling down to around 5,340.
To demolish this top and reversal pattern a daily close above 5,643 is required
Russell 2000 small cap (IWM ETF) has confirmed bullish trend. Positive sentiment on RSI is supporting the bullish picture.
A bullish trend that can lift the Index/ETF higher towards 227 level.
On the weekly chart the ETF has broken bullish out of its corrective triangle like pattern which gives upside potential to 220-227 as indicated by the Fibonacci extension lines
To demolish this bullish scenario a daily close below 207.50 is required
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