Misdirection to Throw You Off the Trail

After yesterday's relief bounce, the market is broadly being whipped around today with small caps outperforming. On the downside, however, semiconductors are among the worst performers on the back of an NXPI earnings selloff. Transports are also being sold as UPS is getting pounded after its own earnings. 

However, I believe the takeaway from this action, once again, revolves around the market-leading semis even as the senior indices are flat-green and are providing some form of misdirection. 

After all, they led us to the upside for many, many years as a sector alongside the "Mag7" names. And while bulls are quick to dismiss their downside, I view it as a sign of ongoing bearish signs lurking below the surface as we head into GOOGL and TSLA earnings this evening. 

On the updated SOX daily chart, the Philadelphia Semiconductor Index is bear-flagging at its 50-day moving average (arrow) and down around 1.5% for the session as I write this. Intraday bounce attempts have been stuffed, and even though leader NVDA does not report until the very end of August, the semis cracking below the 50-day in the coming sessions would be a rather bearish development not just for them, but likely for the Nasdaq an even the broad market at-large given their entrenched leadership position. 

Elsewhere, gold and the miners are surprisingly quiet and mild in their consolidations once again, which I continue to view as constructive action.