SK Hynix has been on an unprecedented tear, with the stock surging nearly 10% overnight. While this move may have seemed unthinkable just a few weeks ago, it’s important to consider the implications of such a steep rise. Despite the selloff, shares remain above the rising 21-day moving average, but the 50-day sits much lower. This could spell trouble for bulls who have been chasing the rally higher.

The sheer number of upside gaps created during the parabolic advance is a cause for concern. Markets rarely leave such large gaps behind without some form of retracement. It’s not necessary to fill all of them, but even a partial retracement could inflict significant damage on late arrivals who joined the rally too late.

The chart above illustrates the situation perfectly. The number of gaps created during the recent advance is staggering, and it’s unlikely that all of them will be left unfilled. As the stock continues to rise, the potential for a painful retracement only grows.

Bulls should be aware of these risks and proceed with caution. While the short-term outlook may appear bright, the longer-term implications of such a steep rise could be detrimental. It’s important to keep a close eye on technical indicators and fundamental drivers to gauge the sustainability of this rally.