7/01/26 2:55 PM SOXL Quick Observation Note: The decline will likely persist for a while; going all-in carries significant risk.

$Direxion Daily Semiconductor Bull 3x Shares ETF (SOXL.US)$

Personal study notes; not investment advice.

After the initial wave of panic selling ends, a small bounce typically occurs—referred to by veteran analysts as an Automatic Reaction (AR)—but the decline does not stop there. If bulls are in control, they will first consolidate prices within a narrow range for a short period, then guide prices lower again before pushing them back up into the consolidation zone. This process is known as a Supply Test (ST), during which bullish institutions assess actual supply levels and the risk of being ambushed by bears. Such moderate declines followed by rebounds may repeat several times. Finally, just when everyone assumes this level is solid support and starts buying aggressively, bulls suddenly dump their holdings, breaking decisively below the support tested repeatedly during prior STs. This triggers a sharp drop over a very short timeframe. Since many retail traders and smaller institutions place stop-loss orders just below the support level confirmed through multiple STs, this breakdown immediately sparks panic and cascading stop-loss selling. At this point, bulls absorb all the dumped shares in one go, causing the stock price to surge instantly and kick off a rapid upward move. This is what’s known as the Spring phase. Later liquidity-focused analysts refer to it as liquidity grab (distinct from liquidity sweep) or liquidity probe—visually appearing on candlestick charts as a long lower wick. On June 10 and June 29, bulls executed such Spring maneuvers. The depth of the Spring breakdown is usually substantial—often exceeding 10% of the share price. On June 10, the price broke down another 30 points below the prior low, and on June 29, it was nearly 15 points. The entire sequence—from breakdown to rebound—often completes within minutes or even seconds. Retail traders who get shaken out during this move will find it extremely difficult to re-enter the position.

Judging from today’s volume, the first support level sits at 225, where bulls aggressively absorbed shares. The current price dropped below 225 to 215 before rebounding back to 225. I interpret this as the ST phase. The market will likely test 215 again. Once everyone assumes the level is stable, the price could suddenly plunge sharply (a spring event).

Conclusion:

Based on recent activity, bulls hold a clear advantage in SOXL, and trading volume data confirms they are accumulating shares. Historically, each accumulation phase rarely lasts less than a full day, so be prepared for extended monitoring. If a Spring occurs, that will be my entry opportunity. Just a guess (truly speculative): it might drop to around 205. I’ll size my position at one Kelly criterion unit—which is already quite risky.

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