Stocks on Tech Trader

Summary: Downtrend confirmed with EMA below SMA and price below both, but entry avoided due to proximity to recent support lows around 131-132, oversold RSI at 33.7 indicating bounce risk, and past short in similar post-drop setup on 9/4/2025 resulting in loss from sharp rally, suggesting <50% win rate on comparable trades.

The chart shows ARM in a clear downtrend since mid-November, with price breaking below key moving averages after the 11/5 earnings report, which had an 18.18% EPS surprise but a -1.21% negative price reaction, likely due to market sentiment or guidance concerns. However, no volume capitulation flagged in the past two months, which is required for safe shorts, but the setup isn't high-confidence for entry because price is hovering near the bottom of the recent range (125-143), with falling resistance trendlines at ~144 not yet tested for a better short entry above current levels.

Simulation of potential moves based on historical patterns: Reviewing past downtrends, like the August-September period, shows a short entry at 135.48 on 9/4 in a similar downtrend led to a loss when price rallied above averages, invalidating the trend. Comparable setups in the last 6 months often saw false breakdowns followed by whipsaw rallies, especially in oversold conditions (RSI <35), with win rate below 50% for shorts near range bottoms—e.g., the 9/4 short covered at a loss after a 13% upside move. If entered short now, risk of similar bounce to test resistance at 144, potentially causing early losses before any further downside to 120-125 support. Upside potential limited by broader tech sector weakness, but downside not compelling enough given the risk/reward skew.

Fundamentally, ARM's AI chip demand remains strong, but recent filings show no unusual insider buying, and options activity is mixed without clear directional bias. Searching for news as of 11/24/2025: (1) Report on ARM's partnership expansion with AI firms—bullish, credible from Reuters, timely, potential for positive reaction but already priced in amid market dip (material, integrated as rally risk). (2) Broader semiconductor supply chain issues—bearish, from industry sources, recent but low credibility rumors, minimal expected impact on ARM specifically (disregarded as noise). (3) No major rumors or events; social media sentiment neutral-to-bearish on X, with discussions on post-earnings weakness. No upcoming earnings or catalysts within 3 days—next earnings estimated February 2026 based on quarterly cycle. Economic factors like potential Fed rate stability could support tech, but no direct cause-effect link to immediate upside for ARM outweighing technical downtrend.

Overall, staying in cash prioritizes patience for a better setup, such as a bounce to resistance for short re-entry or capitulation for long, avoiding repetition of past losses from premature shorts in choppy ranges.