SMH broke out of a declining trend line and is retracing to the 50% Fibonacci level from its March 2026 low with daily conditions oversold, so it is likely due for a technical bounce even if selling continues next day; near-term action is weak, but a bounce could retest the 50% area.

SMH was down over 5% and the selling just literally continued all up until about the last 10 minutes where there was short covering into the end of the day, but gosh, lot of downward pressure in the markets, specifically on tech.

I want to pause for a second because I want to say that the SMH is what I've been following for what's bullish and what's bearish in this market. We've really rallied up. You got to say the story of the year is the SMH, right, with the memory plays, uh, AI data center buildouts, power plays, things like that.

But the SMH really contained how much bullish sentiment we had in the markets. And we see here clearly, what are we doing on this chart, guys? We've had a breakout from this declining trend line right here.

And now we're simply retracing it. And we're doing a retrace. If you see, I've already gotten the cheat sheet here up on for you. We've got the fib retrace from this low pivot in March of 2026.

Price action is coming right here to the 50% fib retrace. All right. And it's doing so at a direct line with an oversold condition right on the daily time frame. All of that tells me even if we see further selling in the next day, we likely are due for a bounce.

Maybe it's coming on on Monday after the selling exhausts itself tomorrow. That's what at least I'm watching for because guys, these patterns are on this show for a reason. They bounce more often than they fail.

All right, so this is a great pattern with an oversold condition due for a bounce with the fib retrace and a declining trend line. I basically have three factors right here telling me despite what could be selling pressure tomorrow, it could be a near-term buying opportunity for price to run back inside that parallel, retest the 50% area of the parallel.

We'll see how that all shakes out tomorrow, but at least that's what I'm seeing on the SMH. Near-term though, that's not looking great as far as how it retraced, how much lower it's retraced, but it is due for a technical bounce.