Zerohedge: Tech Stocks Show Warning Signs

Summary

After an aggressive upside run, the tech-heavy Nasdaq index is displaying a 'shooting star' candle pattern, a potential signal of a trend reversal similar to a pattern seen in late March. While the 'melt-up' trend persists, the market's upside momentum appears to be losing its effortless reflex. The semiconductor index, SOX, has also reversed sharply at its trend channel's upper limit, with significant support levels considerably lower, indicating vulnerability if momentum unwinds. Nvidia, a key tech stock, is testing the lower end of its trend channel and is just below its 21-day moving average, showing a hammer-like candle after a violent correction that might trigger short-term rallies due to overly bearish positioning. Globally, the Korean stock market, KOSPI, is testing its upper trend line and is stretched against its 21-day moving average, a sign that strong upside momentum can precede increased volatility. In Korea, a growing number of older investors are using debt for leveraged equity speculation, with individuals aged fifty and older accounting for over sixty percent of margin loans at top brokerages. This market structure, with high retail participation and leverage, is prone to rapid downside moves. Meanwhile, European equities have seen outflows for six consecutive weeks, and gold is slowly unwinding speculative excesses, with significant selling by speculators in mid-May.