VSheart of the week – iShares PHLX Semiconductor ETF (SOXX)
Potential recovery of US semiconductor inventories (SOXX)
Medium-term technical analysisclick to enlarge the graph click to enlarge the graph
Time stamp: May 22, 2021 at 1:00 p.m. SGT
Source: CMC Markets & TradingView
- Since its recent record high of 449.73 printed on April 5, the IShares PHLX Semiconductor ETF (SOXX), an exchange fund comprised of the top 30 U.S. semiconductor stocks fell -14% to a low of 386.03 on May 13.
- Several key technical elements now plead in favor of a possible takeover in SOXX; From a Fractal Analysis / Elliot Wave perspective, the entire price movement from these dated tipping points (February 16, 2021, March 9, 2021, April 5, 2021, and May 13, 2021) can be considered a flat / lateral abc pattern likely with the potential terminal / endpoint of the lateral pattern at the 386.00 level which closely merges with the 1.00 Fibonacci expansion from the February 16, 2021 decline to the March 9, 2021 low projected from the April 5, 2021 high and the 0.764 Fibonacci expansion of the 5 most recent decline April 2021 high to May 4, 2021 low is projected from the May 7 high 2021.
- The 4-hour Relative Strength Index (RSI) has shaped a bullish divergence signal in its oversold region, indicating that the recent bearish momentum has eased and price action may be due to a reversal. short to medium term bullish at this point.
- SOXX’s ratio charts against the benchmark S&P 500 (SPY) and its information technology sector S&P (XLK) show SOXX’s recent outperformance since May 19.
- If the key mid-term pivot support at 386.00 holds and a break above 419.50 (the pull-back resistance of the former major ascending support from the March 18, 2020 low), SOXX may see a sequence of potential impulsive upward moves to retest its all-time high. oscillation zone of 443.97 / 449.73 in the first stage.
- However, a daily close below 386.00 invalidates the recovery scenario for an extension of the corrective decline to the next support at 367.00.