AI, FOMO, and Trouble Ahead: What You Need to Know

AI is the hottest trend in the market right now. [Jeff Clark's Market Minute]( AI, FOMO, and Trouble Ahead: What You Need to Know By Imre Gams, analyst, Market Minute AI is the hottest trend in the market right now. Investors have piled into stocks like Nvidia (NVDA), Taiwan Semiconductor (TSM), and Broadcom (AVGO) all year. These are just a few of the companies that traders think will benefit the most from the AI craze. So far, they’ve been right. They take up a good chunk of the VanEck Semiconductor ETF (SMH). SMH has been on a blistering rally since May of this year. It’s up 18%. But before you decide to buy into this rally now, be aware. My analysis shows the trend for semiconductor stocks is about to end… Recommended Link [Biden taking credit for Trump’s most wealth-producing policy]( [image]( Live on national television, he’s told millions “I thought of it before anyone else came along.” Discover why he’s taking credit for Trump’s greatest MAGA policy before the 2024 election… [CLICK HERE]( -- Right now, the price charts show trouble ahead. Whenever a market takes off, a lot of folks fall victim to FOMO (fear of missing out). Seeing a stock trade higher and higher is just flat-out painful. Eventually, ill-disciplined traders (or investors) cave in and decide to buy… often at exactly the wrong time. This is how you get parabolic moves (when a stock trades up in a straight line). But this requires traders to keep buying high, thinking they can sell at even higher prices for a profit. Eventually, folks get nervous or realize that the stream of people willing to buy the stock is slowing down and they start selling. This can cause a panicked rush to sell. The good news is that the warning signs are almost always there ahead of time. The current chart of SMH is a great example. There’s a powerful reversal pattern that’s very close to triggering. Let me show you on the chart below: [(Click here to expand image)]( Two important things are going on with this chart. First is the head and shoulders pattern that began taking shape back in June. The head and shoulders is a classic reversal pattern that has three components: the left shoulder, the head, and the right shoulder. You can see these parts labeled on the chart. Once the right shoulder is complete, you can draw a line connecting the bottoms of the left and right shoulders. This is known as the neckline of the pattern. The pattern is complete once prices break below the neckline. Afterward, you can expect to see a swift, sharp sell-off. The second important feature is known as bearish divergence. Bearish divergence occurs when prices continue to make new highs, but the Relative Strength Index (RSI) starts trending lower. SMH didn’t peak until July 28. But the RSI actually put in its top on May 31. This is a sign of underlying weakness in the market. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Chart patterns are always stronger when paired with a technical indicator like bearish divergence. Trimming some exposure to the sector, or even playing the short side, are both valid options. It depends on how aggressive you are as a trader or investor. Either way, it’ll be important to keep an eye on SMH over the next few trading sessions. Because if you’re thinking about buying, my advice is don’t… not yet, anyway. A better opportunity is likely not far off. Happy trading, Imre Gams READER MAILBAG What are your plans? Trim exposure? Play the short side? Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com. IN CASE YOU MISSED IT… [Reverse ‘money machines’ popping up across America]( Machines like the ones in the picture below are popping up all across America. If you’ve been to a concert venue, stadium, or airport, you’ve almost certainly walked by one without knowing. The experts are calling it a ‘Reverse ATM’. They’ve been installed at places like Citizen’s Bank Ballpark in Philadelphia… They’ve even been used at the Super Bowl. Why are these machines suddenly appearing out of nowhere? And what does it mean for your money? We’ve recently arranged an interview with former Goldman Sachs managing director, Dr. Nomi Prins, to get her take. There’s nobody in America who’s more aware of the inner workings of the banking system. In the interview, [Dr. Prins explained these strange ‘reverse ATMs.’]( And she said she expects them to play a key role this Summer as our nation’s financial system is overhauled for the first time since 1971. According to her research, many Americans will be blindsided by what’s to come. BUT, folks who understand the ‘Reverse ATM’ phenomenon before it becomes obvious to the average American could actually profit in the weeks ahead. To help folks prepare, she’s recorded a briefing that explains exactly what she sees coming, how it will play out, and how much time you have to prepare. [Click here now to see Dr. Prins’ free presentation.]( [image]( [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2023 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](