SMH faces short-term downside (approx. 2 weeks) followed by potential Q4 upside driven by technical patterns.

Now what I'm going to do is I'm going to look at SMH, XLF, XBI as proxies for the stock market because how these align. Then we'll look at the NASDAQ and the S&P 500 uh and if uh have a little time we'll look at the VIX and then I'll show you the market condition monitor uh moving forward.

So now what I'm going to do is I'm going to leave this monthly chart and uh then switch over here uh to SMH. [clears throat] So, what did I say about SMH? We had a request for SMH earlier in the show and I said I was going to bring it uh here.

Interestingly, so SMH, I don't normally do the analysis on this uh Katie or RV keep track of this and you can see that they were looking for the this market to move down into this time frame.

Now, there was an earlier low here that was an alignment with the early low. I'll show you in the NASDAQ. And then there you can see they have it pointing down that it may actually come down one more time.

When I look at the daily chart over here, this is one of the issues I had with the stock market and that is it's already broken this low and then you had this big bounce. Probability is pretty high that it's going to move down for another two weeks before this low is in place.

So that would make it coming down maybe testing this low.

This two weeks is really what's important because it aligns with HYG what I showed you and uh the texts are very much uh in alignment with how much it costs to borrow money. That's why we saw the weakness in HYG uh and corporate bonds.

That's why we see the weakness in the NASDAQ relative to the S&P 500. All of that lines up.

So what we're looking here is SMH. But then once this low is got is done in here, then we get into this fourth quarter over here and that's likely to be giving you some upside move in here.

Uh, and why would I think that it could actually be a big upside move? Well, this is a very powerfully configured pattern and that says there's a pretty good chance at testing this.

So when I look at SMH again, some of the evidence down for maybe a couple of weeks, but then probably moving to the upside again.

When I look at, you know, the SMH, it says to me potentially one more sizable sell-off.