Update on the Nested Head and Shoulders in the SOX

• Posted by Greg Harmon
• on September 30th, 2014

The Philidelphia Semiconductor Index or SOX ($SOXX) had a long run higher from November 2012 until it stalled earlier this summer. So what happened? Well the SOX has stalled right at the Price Objective of one of two nested Inverse Head and Shoulders patterns.

The chart above shows both Inverse Head and Shoulders patterns. The smaller one in blue carries a price objective to at least 660, right where it is having trouble. This could lead to more consolidation and maybe even a short term pullback. Despite the Bollinger bands continuing to run higher, you can see the momentum indicator RSI is a wee bit overbought. But don’t forget the bigger Inverse Head and Shoulders pattern marked in purple. This one carries a Price Objective of at least 790, well above the current level.

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