SMH closed today at 234.30, above the Ichimoku Cloud and well above the downtrend channel set from 2022 high to low (grey shaded area). SMH has clearly broken out of this channel, has successfully retested. I see next low at 232.40, which is a Gann confluence line, and then a move back upwards (point D). The reason I see a bounce is that the RSI is approaching oversold on the daily at the confluence line.
Have we broken the bear downtrend? Looks like it to me. In order to resume the bear trend, we would at least need to drop at least to 175 (another Gann Confluence line), which would only take us to approximately the top of the down channel. That would be a 25.6% drop from today's close. If we want to continue the bear trend, then we would need to take out 166.97, the October low, which would be a 28.7% decline from today's close.
Is it possible that we drop another 25 - 28% from here? Of course, anything is possible. However, I don't see it as probable, unless there is a BLACK SWAN event, which no one can predict in any event (by definition). I know that many semi companies have laid off employees, and taken their pill. So future earnings reports may exceed expectations, although product demand remains an uncertainty. But I don't see a 25% drop from here in Semis on organics alone.
Have we broken the bear downtrend? Looks like it to me. In order to resume the bear trend, we would at least need to drop at least to 175 (another Gann Confluence line), which would only take us to approximately the top of the down channel. That would be a 25.6% drop from today's close. If we want to continue the bear trend, then we would need to take out 166.97, the October low, which would be a 28.7% decline from today's close.
Is it possible that we drop another 25 - 28% from here? Of course, anything is possible. However, I don't see it as probable, unless there is a BLACK SWAN event, which no one can predict in any event (by definition). I know that many semi companies have laid off employees, and taken their pill. So future earnings reports may exceed expectations, although product demand remains an uncertainty. But I don't see a 25% drop from here in Semis on organics alone.