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SOXX - my primary scenario considers the rally that topped in June as a corrective wave ( B ) up
The iShares PHLX Semiconductor ETF seeks to track the investment results of an index composed of U.S. equities in the semiconductor sector.
When we look at the macro weekly chart of semiconductors industry we face the very same dilemma which is can we count a spiky sharp drop into mid March low as the whole wave ( 4 ) down.
We do not have much trouble counting that chart into the top made by wave ( 3 ) up at 269.36 in Feb 2020. Our only problems concerns that spiky moves up and down in 2020.
The only argument in favor of a bullish scenario that suggests that wave ( 4 ) down bottomed in March 2020 is the depth of that drop. It retraced 50% of the preceding rally in wave ( 3 ) up.
But we have a number of arguments in favor of the primary scenario that considers the drop into the March 2020 low as subwave ( A ) and the rallied that followed as a corrective wave ( B ) up.
One could point to the fact that this rally managed to make a new all time high. But under the Expanded Flat or Running Flat structure a corrective wave ( B ) up is allowed to make a new higher high over the top of the preceding impulsive wave ( 3 ) up.
One could argue that the drop into the March low stopped very close to the critical support at 144.79 and therefore subwave ( C ) down would not have enough space to go.
However, under the Running Flat structure the final subwave ( C ) down may make a higher low over the low made by the first leg down in subwave ( A ) ( bottomed at 167.79).
In conclusion: I still consider the bearish scenario where SOXX should decline in subwave ( C ) down as my primary one.
SOXX - Weekly chart updated on 6-15-2020
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