What You Need To Know About The $SOX

  • August 20, 2003
  • Derrick Hobbs

Folks,
I’m bearish overall about equities at this point. OK, maybe
“bearish”  isn’t the right word. Let’s say, I’m not a buyer at these levels —
how does that sound? Sure it’s an opinion. But it is an opinion based on
hundreds and hundreds of charts that I’m flipping through and the criteria I use
to determine trades in equities.

The three most important points
I can make going into this weekend for my trading plan are right here:

  1. The SOX has completed a
    MAJOR MAJOR MAJOR Bearish Butterfly pattern
    against a giant weekly time frame resistance zone. The chart below includes
    larger time frame Fibonacci levels not found on

    my previous column     about the SOX last week.



     

  2. The Dow Jones has completed a
    Daily Bearish Butterfly pattern into a Fibonacci resistance zone.



     

  3. The Banks and the Bank Index
    BKX.X did not participate in the run to make new highs and is starting to roll
    over.

I cannot ignore these patterns
and this resistance…

I will not eat green eggs and ham

I can not  buy the Semi land.

I will not buy them in a car,

I will not buy them near or far.

I will not touch them Sam I Am.

(at least for
now)

I consider today’s activity a
major reversal, especially in Semi land. The line has been drawn at today’s
high. If I’m wrong, it will be when semis run up above today’s high in the
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
If that happens great, I’ll be quick to adjust….long live buying up these
stocks. But if I’m right, there is the potential for a multi week, significant
correction that could develop. The risk/reward for long positions right now for
an active trader in the indices do not justify adding new positions here. I’m
considering short trades right now and being patient for a deeper pullback to
look for longs.

Have a great weekend!

Derrik Hobbs