Reviewing Friday's Flash-Crash in Tech
Friday's flash crash was limited to the semi-conductors, and the tech space. We saw a little follow through on Monday, but the selling was orderly, and fear was pretty well contained. Probably margin calls.... and pro shorts taking out certain targets on Apple, and where ever else they decided to shake out investors. No doubt this was planned, but it was also very predictable.
I've been pounding my fist over the over-bought tech sector, the $NDX, and $SOX, for a while now, and I didn't hesitate to call it - in real time - when I came out with a sell recommendation on $SOX at the open, before it had even rolled over. It was obvious that $SOX had over-shot the top of the channel (clearly over-bought), and that points to a pump and dump rally, and by the end of the day the triple leveraged bear ETF $SOXS was up 20% - off the lows of the morning. Not a bad day.
The rally in tech was over-extended. This was a technical correction. Don't tweet bearish news articles at me, after the fact. By the time you get the news, we've already priced it in. I blocked a long time follower just last week, for private messaging me, "$SOX is going up forever". I used to call myself the "Elliott Wave Hound" @elliottwavehound.com , and I will not be thrown off the scent, by such ridiculous nonsense, as random fake news stories, internet trolls, and overly emotional cupcakes.
Speaking of the fake news: I was watching Fox Business Friday, and heard them telling people not to sell... just as the selling in tech was accelerating, but they didn't even report on the crash itself until after the fall. They're as worthless as CNBC!
This isn't the first time I've called a flash-crash, and this was very small in comparison...
This may be the beginning of a larger correction, or the sector rotation, out of Tech, and into Energy. I predicted this in my most recent interview with Dale Pinkert, and I did hear some Money Manager talking "sector rotation", on Fox Business, in an interview yesterday. We did see energy higher on Friday, but it's too soon to say....
The bullish channel on tech isn't broken, so we could even see higher highs, and the broader market remains bullish. Maybe we see one more shakeout in Energy, before the big reversal? Too soon to say.
NASDAQ: Bullish channel in blue. Key support in pink.
Short term we should see a powerful snap-back rally (at least), going into #OPEX, The Fed, and end of the month (June window dressing).
You don't see high fliers like Expedia $EXPE selling off in a panic.
Even the trend on $SOX isn't broken.
Dow - key support 21150. Trend is up. Same goes for the $SPX. Key support is 2400.
Silver and Gold: The larger trend remains up. Very bullish
$GLD wants to consolidate higher, then maybe we see another shakeout, ahead of the next leg higher.
$OIl sitting right on support. I have conflicting charts on Oil. Short term trend may be down, but I can't confirm it. Opening bell just rang.
I'm in the middle of writing my first book, so I don't have as much time to blog as I used to, but I always have time for a morning update on my twitter feed @3Xtraders, and I'll continue to throw out some charts there. Watching, and charting the market, is a full time job, so it's impossible to do much during regular trading hours, but I only have so many hours before the opening bell.
I'd like to offer a special thanks to those who continue to donate to this website. I made some hardware upgrades over the weekend, and was feeling the pinch, until I checked my PayPal, and found over $500, in recent donations. Every little bit helps!
Thanks again, AA
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