Is the Party Over for Semiconductors?
Cracks were anticipated for semiconductors, as the oversold conditions for the Magnificent 7
Last week, the Weekly Compass highlighted a clear divergence within the technology sector: Semiconductors were signaling a bearish reversal, while the Magnificent Seven were showing deep oversold conditions in the daily backed by massive daily volume.
The results this week confirm this rotation. The semiconductor ETF, SMH, fell -9.7%. Micron (MU) served as a stark reminder of gravity, dropping -14% as the stock moved to fill the 1,083.3 gap I anticipated in the Weekly Compass. Conversely, the Magnificent Seven presented signs of awakening, with the following weekly gains: AAPL +8.7%, GOOG +6.4%, META +6.0%, MSFT followed with a +4.7% gain as a high-probability setup, AMZN +4.0% and TSLA +3.6% (despite today's flush). NVDA rounded out the group as the weakest performer with a weekly gain of +1.2%.
Beyond technology, both GLD and SLV are showing signs of a bounce, jumping 1.2% and 3.3% respectively, as the technical formations indicated oversold conditions last Saturday. Unlock all the analyses by upgrading your subscription to paid.
The previous Weekly Compass can be found here:
Methodology: Data Before the Opening Bell
My approach is rooted in technical indicators transparently presented to subscribers every weekend. I model these support and resistance levels every Friday (or last day of the week as today) to provide the information necessary to assess risk and reward before the market opens on Monday.
You do not have to wait for the opening bell to formulate your trading plan. By providing the exact distances to essential levels and defining whether they will act as support or resistance, You can make informed, calm decisions well before Monday morning. This is why I publish this report every Friday (Thursday for this week) around 6:00 PM New York time.
As a perk, I’m posting daily levels for SPX for all paid subscribers, do not miss out, they work as early reversal signals when the central daily level (CDL) is breached.
Last night, I highlighted the relevance of 7,484 as central daily level for the SPX, the price opened well above it, but the indecisive price action sealed the day when that level was breached by 11:30 AM, 7,448 was visited as a daily support, and in confluence with a key monthly level the price bounced to close with daily indecision.
The macro picture added significant weight to this price action. June hiring came in soft, with employers adding 57,000 jobs against a consensus estimate of 114,000. Meanwhile, the unemployment rate ticked down to 4.2%, average hourly earnings rose 0.3%, and weekly jobless claims held steady at 215,000.
Price action rarely anticipate moves when earnings reports are posted, but reaction to economic news can be anticipated in a better way, the structure was and continues weak.
Watchlist Coverage
The levels are calculated for all securities on our watchlist, focusing strictly on mega-caps and high-volume ETFs. This ensures your orders are filled efficiently and that leveraged instruments remain readily available for your trading strategies (Space X is now part of our organic list!):
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, VXX
Major Stocks: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, SPCX, LLY, WMT, AVGO, COST, JPM, XOM, PLTR, NFLX, V, AMD
Crypto & Related: Bitcoin, Ethereum, ETHA, IBIT
Leveraged ETFs: TQQQ, SQQQ, UDOW, SDOW, UPRO, SPXS, URTY, SRTY
WEEKLY LEVELS & SEMICONDUCTORS
Before going to the levels, let’s study how damaged is the structure for semiconductors with the technical chart.