The Semiconductor Index (SOX) is on track, with projections based on the Elliott Wave Principle. After reaching $4647 on May 23rd, it peaked at $5303, settling around $5180. This performance is in line with the anticipated wave extensions, although predicting these in advance is challenging. A warning system with coloured levels is in place to indicate potential reversals, safeguarding positions as prices rise.

The short-term outlook suggests an ending diagonal pattern forming a “3-3-3-3-3” wave pattern. The ideal target for the concluding wave is approximately $5420, though a recent drop prompts consideration of an alternative scenario at $4925. To shift focus, a break below current levels is needed. The index’s rally from April is expected to continue with further highs to be achieved before completion.

Market Opportunities

Pullbacks are viewed as opportunities for shorter-term trades, while long positions remain from the bullish view initiated in April. Market analysis is based on believed accurate data, though accuracy is not assured. Market decisions are the responsibility of individuals, emphasising a cautious approach to trading and investing. The information is not intended as a specific recommendation and should be considered in the context of personal financial objectives and risk tolerance.

Looking at the current structure, we continue to observe the characteristics of an ending diagonal in motion—a pattern often signalling the final stages of a larger upward trend. This “3-3-3-3-3” formation lends itself to a narrowing of the price range, with contractions after each leg higher, revealing that momentum is likely waning.

We’ve noted a sharp reaction near the projected $5300 region, slightly shy of the $5420 upper target. The nature of this move does raise concerns about near-term fragility. A failure to hold above $5100 would draw attention to $4925, a level previously considered less likely but now gaining credibility as a secondary scenario. That possibility hinges on continued weakness, particularly if volume fails to support a move above recent highs.

From a tactical point of view, the pullback should not be immediately considered alarming. In fact, if prices remain above $4925, any decline may simply represent a temporary pause before the uptrend resumes. Similar retracements have occurred throughout this advance since April, many of which re-established bullish momentum shortly thereafter. The way price behaves around $5180 over the next few sessions could determine whether we’re looking at a shallow correction or a shift in control.

Tactical Considerations

Given that, our plan remains to interpret each pullback with a layered view—potential entries for short-term positioning while maintaining a longer bias that has performed well since the spring low. Flexibility matters. A new high above $5303 without divergence in momentum would offer increased confidence that the final leg of the diagonal is unfolding toward $5420. In contrast, any sharp, impulsive movement below $5000 with expanding volume would imply a completed structure, refocusing attention on downside setups.

The caution in our positioning comes from understanding how these diagonals often end—with volatility and sharp reversals. It’s not just a matter of reaching targets; it’s also about recognising when complacency builds near wave completion. Preserving gains from earlier entries becomes the priority if we detect technical warning signs—both from price and breadth.

While the Elliott Wave structure provides the larger framework, we rely on supplementary tools—internal divergences, breadth indicators, and key support breakage—to either validate or dismiss scenarios. Colour-coded alert tools remain active, working in conjunction with trend aggression and volume readings. Together, these offer us a multi-faceted filter rather than a single directional bias.

For any participants actively engaging in options or futures within the tech-heavy sectors, these details help frame both timing and selection. The message here is not to chase blindly into targets just because they exist on a chart, but rather to assess whether conditions are supportive of those targets becoming reality. Patience allows the situation to resolve on technical merit, rather than emotional anticipation. We continue to favour strategic entries on weakness, provided support levels stay intact.

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