July Fireworks
RLT Newsletter
The selling in QQQ accelerated on Thursday as semiconductors cascaded lower for most of the session. If the start of 2026 was the SaaSpocalypse, then Thursday felt like the Chipocalypse for anyone heavily invested in semiconductors.
The QQQ pulled back to its lower trendline and point of control once again, where it should find support and bounce if this is indeed a corrective triangle pattern. A break below the $700 level would be the first warning sign that the correction is deepening and could open the door for a move down toward the 100-day SMA or even a retest of the prior all-time highs.
QQQ Daily Chart
Even after Thursday’s decline, SOXX is still only about 15% below its all-time high. With the ETF’s average daily range currently sitting at 6.19%, that is only about two strong trading days away from new highs. That said, SOXX has been giving us several warning signs that a period of consolidation or correction may have already begun.
The first warning came on June 23rd, when SOXX gapped lower from an all-time high after printing a third higher high accompanied by bearish RSI divergence. It then rallied back and filled that gap almost to the penny before selling pushed it below 24 days of price action.
The next major level to watch is the 50-day SMA near $544. If that support fails, there is some intermediate support around $523 before the 100-day SMA becomes the next major downside target. That moving average is currently sitting near $450, which would represent roughly a 30% correction from the highs. While that sounds dramatic, it would actually be a very healthy correction after the extraordinary rally we’ve seen over the past several months.
As I scan through the semiconductor charts right now, very few still look technically healthy.
SOXX Daily Chart
NVDA continues to hold key support, but it is also forming a large inverted head and shoulders pattern that still needs to resolve. INTC has formed a double top after what now looks like an all-time high bull trap. MRVL appears likely to fill its post-earnings gap lower. AVGO has now closed below its 200-day SMA. MU also appears to have produced an exhaustion gap following earnings that is acting as a bull trap, and it looks capable of filling the gap below, producing a move very similar to what happened after its previous earnings report.
Could Bitcoin Benefit?
Two of the fundamental reasons I have been bearish on Bitcoin may finally be starting to change.
The first has been my belief that investors simply had little incentive to move further out on the risk curve into Bitcoin while they could earn tremendous returns in AI and semiconductor stocks. When names like MU, AMD, and other chip stocks are producing outsized gains, capital naturally gravitates toward those opportunities instead of an asset that has spent months trending lower.
I’ve repeatedly said that until this dynamic changes, money is likely to remain concentrated in semiconductors while Bitcoin continues to bleed lower.
That rotation may finally be beginning.
Realistically, we are now within roughly three months of Bitcoin’s historical seasonal bottom, and there is a legitimate case that the bottoming process has already started. If money begins rotating out of AI and semiconductor names, Bitcoin becomes a much more attractive destination for investors looking for a high-upside asset that has already experienced a significant correction.
DXY Could Turn the Tide
The second reason centers around the U.S. Dollar Index (DXY).
DXY and Bitcoin have historically shown a strong inverse relationship. Recently, DXY broke above the important 100.00 resistance level. If that breakout continues higher, it would likely tighten global liquidity conditions and create additional headwinds for Bitcoin.
However, if DXY pulls back to retest 100.00 and fails to hold that level as new support, the breakout could turn into a false breakout. That would be a meaningful bullish development for Bitcoin and could provide one of the catalysts needed to complete a medium-term bottom.
DXY Daily Chart
Bitcoin Having a July Pop
Bitcoin is trading at an interesting technical level.
I still believe there is a relatively high probability that Bitcoin eventually makes one final low sometime this fall. However, it certainly does not have to.
Historically, every time Bitcoin has broken below its 200-week SMA during a bear market, it has continued another 30% lower before ultimately bottoming. So far, Bitcoin only traded about 8% below the 200-week SMA before finding strong support at the anchored VWAP from the 2022 bear market low.
That is an important level, and the fact that it held while bullish RSI divergence developed makes a meaningful relief rally a very reasonable expectation.
There is also some historical precedent supporting that idea.
In July 2022, during the middle of the last bear market, Bitcoin enjoyed a strong rally before ultimately rolling over and making one final low later in the year. July also tends to be a seasonally strong month for equities and has produced positive returns during each of the last four midterm election years.
While I still believe history favors one final low sometime this fall, I also think there is an argument to be made for adding Bitcoin exposure (IBIT) under $65,000 where risk reward is decent and where, collars and puts can help mitigate downside risk if we do get a nice July pop.
I’ve started doing exactly that. If Bitcoin continues lower, I plan to add more aggressively in the $54,000 to $49,000 region and then again near $38,000 if it ever gets that low. On the other hand, if Bitcoin rallies strongly through July, I plan to collar the position to lock in a guaranteed profit while still maintaining upside exposure.
If you’d like to learn how I use options to create these “can’t lose” position trades through collars, covered calls, LEAPS, and other strategies, check out my upcoming Swing & Position Trading Master Class, where I teach the complete system step by step.
BTCUSD Daily Chart
