$SOXL Current price: $97.09 (24h: -18.58%)
From its year-to-date high, SOXL has already fallen nearly 68%, yet the funding rate is still positive.
The position is deep in the red, and you still have to pay out every eight hours just to hold it. That’s the worst part today.
Those holding inverse products are feeling good; the ones who thought it was cheap and added to their positions a few days ago are feeling the most miserable.
Let’s explain the broader backdrop.
CPI came in hotter than expected, bringing rate-hike fears back. The market has raised the odds of a rate hike in October to 43.7%. When data like this hits, money pulls out of high-volatility semiconductor stocks first;
U.S. chip stocks have fallen for six straight sessions;
The entire market saw $476 million in liquidations over the past hour, with longs accounting for most of those forced out.
These are the market conditions, not the direct reason SOXL is down today. But it comes with three-times leverage and tracks the semiconductor sector, so when the sector moves one step, SOXL moves three.
On the chart, the price is less than 1% above its 30-day low. 96.43 was both the low for the past two days and the low for this month.
The four-hour chart is genuinely deeply oversold, but oversold doesn’t guarantee a reversal. All the short-term moving averages are above the price, so any bounce could easily get pushed back down.
I’m more convinced the direction is down. Most people are watching the oversold conditions and trying to grab a rebound. I’m not joining them.
The funding rate is still positive, which shows longs are still crowded and haven’t fully cleared out. When a rebound comes, more will leave than enter.
If the funding rate turns negative and the price can decisively reclaim 96.43 and hold above it, then today was a wick, not a change in direction—and the basis for the bearish view will be gone.
For now, I think it will keep grinding lower. It’s only a matter of time before this level breaks.
#SOXL
From its year-to-date high, SOXL has already fallen nearly 68%, yet the funding rate is still positive.
The position is deep in the red, and you still have to pay out every eight hours just to hold it. That’s the worst part today.
Those holding inverse products are feeling good; the ones who thought it was cheap and added to their positions a few days ago are feeling the most miserable.
Let’s explain the broader backdrop.
CPI came in hotter than expected, bringing rate-hike fears back. The market has raised the odds of a rate hike in October to 43.7%. When data like this hits, money pulls out of high-volatility semiconductor stocks first;
U.S. chip stocks have fallen for six straight sessions;
The entire market saw $476 million in liquidations over the past hour, with longs accounting for most of those forced out.
These are the market conditions, not the direct reason SOXL is down today. But it comes with three-times leverage and tracks the semiconductor sector, so when the sector moves one step, SOXL moves three.
On the chart, the price is less than 1% above its 30-day low. 96.43 was both the low for the past two days and the low for this month.
The four-hour chart is genuinely deeply oversold, but oversold doesn’t guarantee a reversal. All the short-term moving averages are above the price, so any bounce could easily get pushed back down.
I’m more convinced the direction is down. Most people are watching the oversold conditions and trying to grab a rebound. I’m not joining them.
The funding rate is still positive, which shows longs are still crowded and haven’t fully cleared out. When a rebound comes, more will leave than enter.
If the funding rate turns negative and the price can decisively reclaim 96.43 and hold above it, then today was a wick, not a change in direction—and the basis for the bearish view will be gone.
For now, I think it will keep grinding lower. It’s only a matter of time before this level breaks.
#SOXL