Jun. 3 at 12:49 PM
$SOXX $SOXS $SOXL $QQQ
The semiconductor ETF (SOXX) is flashing an alarming warning sign. Trading roughly 80% above its 200-day moving average (DMA) of 339, this historic extension mirrors the catastrophic silver bubble from early this year.
In January, silver parabolically stretched nearly 100% above its own 200-DMA, peaking at
$121/oz. The inevitable "Silvergeddon" crash on January 30 saw silver plunge 39% in a single day—its worst drop since 1980—fueled by a massive CTA and retail liquidation.
This collapse completely decimated the ProShares Ultra Silver ETF
$AGQ, a 2x leveraged vehicle. Forced daily rebalancing and compounding beta slippage turned the leveraged ETF into a absolute wealth destroyer during the swift downturn. History warns that extreme DMA extensions are very dangerous.