The semiconductor index (SOX) rose 50% and posted 18 consecutive up days. On Friday 24 April, RSI5 was 98.7 and RSI14 was 85.1, on a 0\u2013100 scale.<\/p>\n
RSI5 was the highest on record for the index. RSI14 has been higher only twice, in 1995 and 2011.<\/p>\n
To compare with past extremes, similar cases were defined as RSI5 above 95.0 and RSI14 above 83.5. Since 1994, this occurred three times, and a further three times only one of the two thresholds was met.<\/p>\n
Across all six cases, the average immediate move was -7%, with a range of -5% to -11%. The average intermediate forward return was 15% (5% to 67%), with 1998 the only negative case.<\/p>\n
At 12 months, the average return was 8%, ranging from -40% to +80%, with 1998 again the outlier. Excluding 1998, average intermediate and 12-month returns were +25% (5% to 67%) and -26% (-39% to -2%).<\/p>\n
An Elliott Wave count placed a pullback zone at 9,700 \u00b1 200, followed by a move to 13,000+. It also described a later cycle that ends the rise from the April 2025 low and then leads into a new bear market.<\/p>\n
We see the recent 50% surge in the semiconductor index (SOX) as a signal of extreme strength, but also exhaustion. This historic 18-day winning streak has pushed the 5-day RSI to an all-time high of 98.7. Even with strong Q1 2026 earnings reports last week from key industry players, the index has struggled to push much higher, suggesting the rally is overextended.<\/p>\n
Looking at the six times since 1994 when we saw similar extreme readings, an average drop of 7% followed in the immediate short term. This pattern of a sharp but brief pullback has been remarkably consistent across decades of market activity. The historical range for this decline is between 5% and 11%, providing a clear map for near-term expectations.<\/p>\n
Our wave analysis supports this, suggesting we have just finished a major upward impulse and are now entering a corrective pullback, labeled as green Wave-4. This aligns perfectly with the historical data pointing to a short-term drop. We project this correction will find a bottom in the $9700 +\/- 200 range.<\/p>\n
Therefore, for the coming weeks, derivative traders should position for a decline from the current index level of around $10,450. The latest Core PCE inflation report for March 2026, which came in hotter than expected at 3.1%, provides a fundamental headwind that could trigger this technically-indicated sell-off. Strategies like buying puts or establishing put debit spreads could be used to capitalize on this expected move while defining risk.<\/p>\n
However, we see this expected dip as a temporary reset before the next major advance toward the $13,000+ level. Historical data, excluding the 1998 anomaly, shows that after the initial pullback, the index rallied an average of 25% in the intermediate term. This suggests that the end of the corrective Wave-4 will present a significant buying opportunity for call options or bullish spreads.<\/p>\n
Beyond that intermediate rally, the data points to significant risk developing about one year from now. Once the final upward wave completes, historical precedents warn of a sharp decline, with an average loss of 26% over the following 12 months. This corresponds to our forecast for the start of a new, significant bear market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" SOX surged 50%, hitting record RSI5 extremes; history signals near-term drop, mixed longer returns, Elliott pullback then rally.<\/p>\n","protected":false},"author":87,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71],"tags":[],"class_list":["post-45635","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t