New Lows Expand While Semis Go Parabolic

It remains the Semis world, and we’re just living in it. For nearly two months now, we have heard folks saying the semis are parabolic. That has not been my view. Mostly, I thought the rises were slow and steady.

Were they huge moves? Sure. But as I have said before, I think folks like to throw around terms like this when they are not needed. I have cited examples where folks scream crash or melt up when simply decline or rally will do.

I am sure there is some special market dictionary that defines what parabolic is, but to me, it’s when a stock goes vertical. I believe when this chatter about the semis first began, I cited Avis Budget (CAR) as a stock that had gone parabolic. The stock was up seven or eightfold in two weeks.

In the semi space, I even cited Intel (INTC) as being parabolic because it had doubled in three weeks, and it had begun to gap up. But you can see that it corrected and now looks like a stock in an uptrend. Thus, apparently, it was not parabolic.

I also noted at the time that Western Digital (WDC) looked like a slow and steady climb, not parabolic. It had taken rests along the way, but there was nothing vertical on the chart. That changed last week when the stock ran up 50% in a week and did so on gaps. Then it closed on the low of the day Friday.

Let’s call it a mini parabolic move. Obviously, if it continues, it will go full parabolic, but in the meantime, this stock looks overdone.

Then there is Applied Materials (AMAT). It was only up 30% last week (hah), but you can see how it is starting to have that vertical look as well. Yet I’d like you to squint hard and notice something about last week’s action. Each and every day, the stock closed at the low of the day. That too speaks of a stock that feels in desperate need of a pullback. Should it keep going in this fashion, it would likely turn parabolic.

In any event, while the semis were soaring last week (I should note the chart of the SOX itself does not look like AMAT and WDC), the number of stocks making new lows on Nasdaq zipped right back up to just over 200 issues. In fact, on Friday, there were 218 new highs on Nasdaq with 217 new lows.

My Overbought/Oversold Oscillator is set to get back to an overbought condition mid to late this week. As a reminder, I still think the Oscillator is more apt to look as it did last fall, hovering back and forth tightly to the zero line, than actually oscillating between big overboughts and big oversolds.

Let me address how weak the NYSE has been. Since mid-May, the Volume Indicator has moved from 53% to just over 48%. That’s a lot of weakness under the hood. It should get oversold around 47%, but it is rare to see it so weak with the indexes at their highs.

Finally, I will end by noting the DSI for Crude Oil (WTI) is now at 14. I continue to think there will be an oversold rally from that low 70s area.