RSI near 30 has set up a bounce that may extend a bit, but he expects SMH to fall below the 503 level after an ABC rally off 503 topped at 639. Dropping below 503 would set up a great rally; semiconductors are highly cyclical, having dropped over 65% in past downturns.

the RSI on SMH got down to 30 late last week. uh which is where it was uh at the last trading low near 503.

I look at SMH as opposed to SOXX. Um when uh SMH was up around 668 on June 22nd, my take was I think it's going to drop to 527. And I refined that that it would drop a little below 515. It bottomed at 53 503.

When you and I spoke back in mid August, my expectation was that we were going to see a rally up towards 600. Uh we got it. We then got a pullback and over the last two weeks, what I've pointed out, David, is the rally from 503 to I think it was 607, then a pullback to 540.

If it was equal, it'd get to 634. Where did it top at? 639. So, when we got there, my take was we've just completed an ABC rally off of 503. We're going lower. I still believe we'll see SMH below the 503 level.

but as I noted earlier, the RSI and SMH got down to about 30. It was do a bounce and today that bounce is, you know, being realized. So, I think can it extend a little bit further? Yep.

Oh, great. There's the SMH and you see the RSI um down to where it was when SMH was down at 503 U and you know in late July I believe. Uh so yeah, I think we're going to get a bounce.

The thing I point out in semiconductors, it's one of the most cyclical sectors there are. In 2001 and two and in the financial crisis, SMH dropped by more than 65%.

and if the SMH drops below 503, it's going to set up a great rally.