Happy Monday morning, everyone!
Let’s jump right into the latest action in the Nasdaq 100 with a daily chart, where it looks like a trap was sprung on the bulls into a marginal ATH:
On a weekly chart of the SOXX Semiconductors ETF, price failed to hold the red moving average (see previous SOXX update) and made a decisive move down to continue driving an intermediate term H&S pattern formation:
I posted a Microsoft chart and comments in another thread:
In addition to MSFT, this daily chart of Apple shows a marginal ATH / double top with the action now below the yellow intermediate term SMA and not too far above a vital support area:
In addition to semiconductors, healthcare has been one of the better performing sectors during this long term bull, but looks now to have a made a strong move down decisively shifting the short, intermediate and long term momentum downwards:
In previous updates, I brought up banks. The chart below shows the high correlation between the real estate sector and regional banks:
And if we take a closer look at the action in real estate, we can imagine what it will mean for regional banks:
Going abroad to Japan, please see the Nikkei big picture weekly chart in an earlier update which shows a potential H&S pattern formation. In this daily chart below, we’ll take a closer look at the “right shoulder” currently in formation, which seems to have made a lower high. The red SMA turning down and a break through the yellow SMA and dashed support floor will give a final confirmation:
The Indian Sensex has been the 2nd best performing stock index behind the Nasdaq 100. No doubt that it is in bubble territory. We see not only a lower low but also the intermediate term yellow SMA turn down confirming that the recent ATH was the intermediate cycle high. With most global central banks now in rate cutting cycles, this strongly suggests that it was the bubble blow off top for this long term bull.
Right now, there are so many areas that have either already started or are on the verge of breaking down that any one of them could start a chain reaction across risk assets. Again, it’s impossible to say in which order it will happen, but it’s also impossible to ignore the dominoes lining up near the edge.