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Not expected, but not surprised

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I didn't expect the Semiconductor Index (SOX.X) to trade higher by 6% today, but I'm not surprised at the action I'm seeing here either. If I simply look at a chart of this index and remember previous observations as it relates to trend and levels, I'm not overly enthusiastic in the group. The only thing that has me vaguely interested here is the bullish percent indicator from point/figure charts that has the group in "oversold" territory. Resistance looks firm at 610, which is the 38.2% retracement level we've been watching for days. We can perhaps see how this index at 550 gave a bearish traders targeting 515 (0% retracement) less upside for his/her trade and perhaps moved him/her to cover positions and lock in gains on bearish positions when bond YIELDS started ticking higher two hours ago.

Semiconductor Index (SOX.X) Chart - 60-minute interval

By identifying levels of resistance, trader may have ascertained that there are/were 7 levels of resistance above current levels, but only one level of support that resided at 515. Currently, I'd like to see the first two levels of resistance broken to the upside at 586. This is a good level to set an upside alert at as it coincides nicely with the 50-period MA and old upward trend.

Jeff Bailey
Senior Market Technician

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