Looks Like Everyone Is Taking Their Sox Off for Summer

I noted earlier that the Powershares QQQ Trust (ticker: $QQQ) was showing relative weakness in today’s action. In fact that weakness goes beyond one day and here may be the culprit: the Philadelphia Semiconductor Index ($SOX). A quick look at the SOX relative to the QQQ on the ratio chart below shows that it is accelerating its trend lower the last few days.

So if the SOX is causing weakness in the QQQ what does the SOX look like going forward? Brace yourselves. Below is the daily chart of the SOX. Not very pretty. It also has been accelerating

lower. There are some signs of hope. It has now reached the 50% Fibonacci retracement of the move higher from September and the Relative Strength Index (RSI) is getting into the oversold area. It may bounce or consolidate but the trend remains lower. A fall below the Fibonacci sees potential support near 380 from the Fibonacci Arc and then 370. Moving to the weekly chart shows the SOX is retesting the neckline of the Inverted Head and Shoulders breakout from late 2010. As it hits that

level the RSI is falling sharply and the Moving Average Convergence Divergence (MACD) indicator is growing more negative. It has also just passed through the 50 week Simple Moving Average (SMA). If it breaks the neckline the next level of support lower is at about 365. Keep an eye on the SOX. If it turns, the QQQ may gain some strength against the other Index ETF’s, otherwise look for continued weakness.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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