The $SMH is down 7.7% for April, continuing a pattern of weakness for the month of April. It was lower by 6+% in 2023, -14% in 2022 and down less than 1% in 2021. Going all the way back to 2000, it is extremely rare to see it down more than 10% and usually it snaps back to the upside in May.
Although April isn’t finished and past performance is not indicative of future results, I’m warming to the idea of an oversold bounce soon. My only hesitation lies in the utter collapse in the moving average of this oversold signal. We have not yet breached long dated oversolds and have just clustered a series of signals because the market quite literally got fucked to the downside in a very sudden and extreme move lower.
What I’m trying to convey is the nature of the market has changed and the tape is different, a new paradigm based off higher rates and that’s not exactly good for the economy.
Should $SMH dive lower by another 3-5%, I’m an aggressive buyer. Presently I’m very bullish on $BTC and defensive secular stocks like $GIS and $KO, due to a rotation out of risk into staples and low beta stocks.
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