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Announcements: Due to the Thanksgiving Holiday, the next newsletter will be the usual weekend newsletter on Sunday.

The stock market has been a bit schizophrenic the last two days, sending conflicting messages. 

Bitcoin continued to slide while USD and gold tried to stabilize.

SOX, comprising several important AI chip stocks, has been a market leader in the last few years but is now lagging. Let us revisit it today.

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SOX – Technical Analysis

  • We went bearish in July on the Semiconductor Index (SOX), which exhibited a historic outperformance to more traditional market sectors. That is typically corrected in the following market downturn.

  • That led us to opine that SOX will lead the market in the following market down phase.

  • Although the general market has not seen that down phase yet, SOX started to underperform NDX and other indexes significantly. Is it leading?

  • We also identified a potential head-and-shoulder pattern in the SOX price pattern, but it has yet to break below the neckline to confirm it.

  • Notice that SOX is below all 10D EMA, 50, 100, and 200 MAs. 100 and 200 MAs have not turned down yet, when they do, they will “define the long-term trend down, as long as SOX trends below them. 

SOX – Cycle Analysis

  • SOX has been following the daily cycle composite since the summer peak.

  • The cycle composite suggests that SOX may participate in the Santa Clause rally.

  • The weekly chart cycle composite indicates a cycle trough, dominated by the 3-3.5-year cycle, in 2026.

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  • Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters.

    • Professor Shilller’s cyclically adjusted PE (CAPE) is among the three highest values in 100 years. 

    • I posted charts before that indicate such high valuations typically lead to multi-year weak stock market returns.

    • Yesterday, I posted a cycle analysis of CAPE indicating the next cycle trough of significance in 2030-31.

    • This rhymes with my long-term cycle analysis of the stock market with a cycle trough circa 2030.

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