The Tech AI Sell Off That Couldn't Even Fool Retail

Quick Rundown of yesterday's tape - in case you were absent on Thursday - lucky you!: 

• Volatility immediately spiked at the open 
• There were few hiding places to be found - even energy took another leg lower. 
• By the end of the day - what used to be the hottest sector - SOX Semiconductor index had crashed like we haven't seen - I think - since the covid crash. 
• Technology the most widely owned sector - by far - down (-8%).
• Nothing was spared - the baby was thrown out with the bathwater.  

 Honestly, if I had to choose only one word to describe Thursday's action: BRUTAL 

Yet the $VIX still remains below 30, and that means I'm still on track to buy the dip as planned. I don't want to leave anybody hanging, after a day like that.  

The Lack of Volume is a Tell 

As bad as things looked at yesterday’s close, selling volume DOES NOT confirm Capitulation.

We  didn’t see record selling volume in the NASDAQ Composite, or even the $SOX. In fact we saw heavier selling volume back in July, during the summer. Of course, selling volume was heavy, but it was NOT earth-shattering. Let's pull up a simple semi chart: 

$SMH (VanEck Semiconductor ETF) - $SOXX also works, and looks about the same. Check me out on that.... chart it for yourself.  1. Volume doesn't point to capitulation in the space. 2. There's a gap target in plain sight - if the powers that be want to break the chart, ahead of the holidays I'm sure they won't have any trouble... but as of today the chart isn't broken. 3. The bullish trend remains intact - represented by my lower blue line. 4. The chart pattern: resembles a downturned megaphone, or triangle if you prefer. 

My personal opinion is that this bear raid was rushed, because: 1. Thanksgiving is in less than 3 weeks, and 2. Hanukkah comes early this year, and even the dumb bear raiders know not to sell a dull tape.

Final point: The selling on the $KOSPI is also less than convincing. Sure, they were able to break the $KORU - the 3X Bull ETF, and there was record selling volume as it crashed 37.39% - yet the KOSPI itself was only down 5%? 😏  That points to just another narrowly focused, 1 day bear raid - not pure panic. 

 Seeing the $KORU up 11% this morning. No sign of follow-though, after yesterday's selling. 

 

 

   

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