SMCI - Is it the new darling of tech?
SMCI is a stock I like very very much. However, I divested it just before market close on Friday before the inclusion into the broad market index was announced. Well.....this is testing my 'ignore the emotions' capacity. But it does feel sucky seeing a stock you just sold off gain lots in the after market. Oh wells....life goes on! 😄
To be fair, I am bullish SMCI long terms as do I on the other names that I associate with AI such as Nvidia, AMD, Marvel, Micron, so forth and so on. I believe that AI is only just starting and the runway is still long ahead. However, lets get real. At this moment and time, I believe the valuations are really really stretched. And that is to put it mildly. Sentiments are bullish bordering on bullish extremism and when you hear people saying valuations are ok at these levels, you tend to question yourself. What reality are we in? Welcome to the world of sentiments and how it drives people's decisions. So having said that, I tend to go to the technical picture to decide on my risk positioning. And what I see are only a number of tech names still having some possible squiggles upwards. And they are already in the final fifth waves of the fifth waves of bigger patterns stretching several years.
So I believe the market is in the final stages of the topping process of a huge bull market stretching over 14 years or it is in the B wave of one that topped in 2021 (which means a C wave drop is coming). And that is why I am ultra defensive and positioning as such. When markets dive as a C wave, they do so at a breath taking pace. And this market has already surpassed all expectations to the upside. The magnificient seven has given way to only three holding up the market and that is a warning indicator. Apple and Microsoft are not making new highs as the broad market index charts new highs. The leaders up tend to lead on the way down. Market noise calls that a broadening rally. I call it the 'check engine' indicator sign. Ignore it at your own peril. As such, I continue to raise cash into strength.
To touch on the topic, SMCI is making its final push to complete its pattern after all. Amidst Nvidia and AMD making new highs and this SMCI not participating, I was expecting a truncated fifth wave hence the seliing but now it looks like it might clear its prior highs to complete its fifth wave. The topping process is finalising itself quite nicely as stocks take turns to drop by the sidelines. Target price for SMCI's fifth wave push? 1200-1300 is a possibility. But I am not chasing. Happy for those still vested. However, to those reading, please take precautions.
Disclaimer: Please kindly do your own due diligence as this is a sharing article and in no means financial advise. I am just sharing my opinions and thoughts.
Thanks for reading my commentary. Hope it helps!
Stay safe! 😊
$Semiconductor Bull 3X Shares(SOXL)$
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