Know what a top looks like? Here are a few examples. (June 30, 2017)
Semiconductors ( MUTF:SMH ). In this video we are just looking at a few of these, because I think it is important to understand the that hope my spring eternal, but it is not really going to help make you any money in the Semiconductors ( MUTF:SMH ). We look at some topping patterns here. First of all to kind of set the framework: Bonds ( INDEXCBOE: TNX ); I just saw an article come across my alerts right towards the end of the day on Friday, about how the move higher in bond yields, in other words the selling off of bonds, is kind of directly correlating with tech stocks.
I won’t go into detail, but I would be remiss in talking about the weakness in Semiconductors ( MUTF:SMH ) if I didn’t at least mention this. I think it is important just the way the bonds are trading (I am kind of mixing subjects here). These yields, for two days in a row, have held above the 50-day moving average and actually kind of popping out a little bit from a volatility squeeze. So I think we are going to get higher yields on the treasuries, they are selling-off.
The tech sector is selling-off too. We will look at Semiconductors ( MUTF:SMH ), this is not where you want to be. Broadcom ( NASDAQ:AVGO ), I am a big fan of Broadcom ( NASDAQ:AVGO ), this is toppy as well; it hit right at the same time as the Semiconductor ETF( MUTF:SMH ), so they are all kind of going together.
NVIDIA ( NASDAQ:NVDA ), same thing. Not quite as bad. These stock all peaked on, nice pop here, and then we have never come close, on these stocks, to moving to new highs. They were just too overbought, had come too far, too fast. And then this was really the kiss of death. A nice move here and then the next day a bearish engulfing pattern completely covered up the prior day’s trading. Not even gotten close. So I want you to stay away from Semiconductors ( MUTF:SMH ) for the time being, because these are toppy.
Speaking of toppy, JD. ( NASDAQ:JD ), double top, right here. All we need to confirm that would be a breakdown below $37.00 or so. What to look for on these is, first of all, a top, then we have whatever this low was, then a second attempt at this level, and that didn’t work too well. So finally what we need to confirm that this is indeed a top is a breakdown below this low. For JD. ( NASDAQ:JD ), if we get a rebound on Monday, and you can see it is a rebound off the 50-day moving average, you have only got a couple bucks that you can look for, maybe three dollars, before I would expect this stock to roll over. Again, earnings aren’t going to be an issue. This is really just a question of money in, money out. And the way this has traded I think this is the last gasp. You want to stay away.
So in total, on this video, what I am really talking about is just being able to recognize tops, Semiconductors ( MUTF:SMH ), these are tops. Ultimately, they, Broadcom ( NASDAQ:AVGO ), may come back to life and move again, but for the time being, NVIDIA ( NASDAQ:NVDA ), let somebody else own these stocks.