The semi-conductor sector is clearly in bearish territory.  The superstar chip stock NVDA dropped 18.8% on Friday due to bad earnings and forecast.  The chip sector ETF SMH topped in March 2018, but NVDA was the last man standing in chip sector until October 2018.

NVDA is oversold short term.  It has corrected almost 50% of the entire spectacular rally of 24.75-292.76 from 2/12/2016-10/5/2018.  The final bottom is not in, it will need time to finish the bottoming process.  The bear market in NVDA usually ends while the business is still in a downtrend.  The foretell sign is when bad earnings and forecast can’t drive down the price no more.  The market is exceptionally perceptive, it will anticipate the turnaround of the business when the true bottom is here.

SMH rallied from 2/12/2016-3/16/2018.  It has corrected 38% of the run of 45.03-114.55.  The 50% time retracement is 3/29/2019 and 61.8% time retracement is 6/28/2019.  This time frame correlates to the time needed for the general market to finish the bottom.  The broad tech sector can’t rally without the semi sector’s participation.  So the QQQ will bottom with SMH.

The DOW has the best looking chart that’s contained in the price channel.  It is 2 bars into the weekly cycle that started on 11/02/2018.  Due to the holiday seasonal influence and the need for the funds to window dress their performance, the DOW index will continue to be contained in the price channel, which means sideways and choppy price actions from here until the year end.

At the present time, we affirm our analysis that the 4-year cycle high to low phase is in control of the market. Caution is need and cash is the best.  When the next 4-year cycle starts, a lot of money can be made with confidence.