Short SMH - Blow off top?Just a hunch but especially since the tariff's from this week didn't go into effect and now China is pushing back again - speculation could begin that Trump bring those tariffs back into the conversation if China doesn't move on their promises... Plus inventory should be ridiculously high for most of the semis.
SMH
Semiconductors
SOXX ShortSOXX is on the verge of a major breakdown, much like the one that lead to the melt down in Q4 of last year (followed by a ~20% drop after the trend break). However, we are not there yet because we are resting on support. The main, long term pattern we are looking at is a bearish rising wedge. Within the wedge we also have a symmetrical triangle which was entered from above, which suggests - as a continuation pattern - that price will follow lower. Keep in mind there is also another green trend line underneath which acts as a type of extra confirmation which must be broken for a definitive sell signal. A sell signal will be confirmed once we have a daily close below those trends, and especially if we have a weekly close below. Given how resilient this market has been, it would not be unreasonable for SOXX to put in a marginal new high first, thus extending the negative divergences on the PPO and RSI before the grand finale to the downside. Since we are very oversold on the 1-hour candlesticks and have positive divergences building on the market futures (ES and NQ), we can at least expect a small thrust up to the resistance shown as the double green lines above. Either way, once we crack below, there will without question be volatility, maybe even a back-test of the broken wedge pattern, but ultimately I can foresee SOXX going down to the second yellow uptrend shown below. The lower yellow uptrend is one of the two supports I have drawn from the November 2008 lows, following the Great Recession. Both have acted as support and resistance many times, thus showing that both are important levels that price will abide by. Such a move would equate roughly to a 25% drop, depending from which point we break down from.
For this trade, we will be using SOXS, a triple levered inverse ETF of SOXX. I would avoid the use of put options since that involves gauging the time frame in which this move occurs which only adds even more difficulty to an already complex setup. A suggested stop loss would be anywhere just above the top of the daily candle which confirms the initial break down.
AMD upward channel breakAMD appears to be breaking upward out of its month-long downward-sloping channel. It broke the channel briefly an hour or two ago, then pulled back a bit, then surged back up through the channel top. I'm not sure if we'll pause here or continue upward to 30.29 by market close, but I suspect the latter. Regardless, if an interim trade deal does get signed, AMD will be a big winner for the next week or so. If an interim deal doesn't get signed, AMD will erase these gains overnight.
A partial war-trade deal? / Semiconductors +Trump has said many times before, he did not want a "partial" trade deal.
There seems to be real volume and buying, sending the whole market to highs.
There is a possibility that this "partial deal" is just a delay of tariffs (october 15th, and December?) and buying of agricultural products (soybeam, pork). Which we have seen before, unfortunately, to mean nothing.
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Have a great long weekend.
Trading starts Tuesday because of Columbus day on Monday 14th.
Trading the range on SOXLHere's how I'm trading SOXL right now. I buy when it gets below the red channel and sell when it gets above the red channel. A breach of either of the blue trend lines would indicate a breakout from the current trading range. So I'm keeping a stop loss just below the lower blue trend line.
Today I exited at 170, and my next buy order is at 152.50. I hope to see that Monday, although with trade talks coming up in mid-October, we could easily see the uptrend continue.
In my opinion, semiconductors are overvalued right now. Given the weakness of their earnings, they haven't fallen as far as they should. But if we successfully sign a trade deal, they will explode to new highs regardless of their earnings. So keep an eye out for China news.
Micron could tumble after earnings on downgraded FY guidanceMU has a "buy" rating and a positive earnings surprise prediction from Zack's, and buying any semiconductor stock at such an attractive P/E is never a bad bet. (MU's P/E is about 6, vs. the average of about 15.) However, MU is also getting some massive bearish options activity, and in my experience these big options traders usually know what they're doing.
Options traders may be betting that even if MU earnings beat analysts' lowered expectations, the headlines will focus on the year-over-year and quarter-over-quarter declines. More importantly, these options traders may be betting that Micron will make a statement revising downward its full-year earnings guidance. Guidance almost always matters more than earnings surprises.
Semiconductor (SOX) to gain 50-100% in the next 5-10 yearsThe trend is obvious.
Proud to be the only few longs on the stock market while everyone else is screaming crash and recession.
Semiconductors are going through secular trend.
It will still be cyclical but the cycles will be much smaller and limited.
Charts are telling us different story.
Market always moves ahead of narrative.
The narratives are there, buried below the noises.
Valuations might be expensive, but the total value creations and total addressable market are big.
The trend is obvious.
People will be left wondering why they have not seen this coming in 10 years to come.
LSCC looking to go again from my viewLiking a swing opportunity in LSCC here. It's got that look to it!
Semiconductor strength will continue, target 208SOXL attempted a breakout above its channel and above April's highs, but got rejected and dropped back down to support at the 50-hour moving average. Here it's showing renewed strength, with volume turning green and candlesticks looking bullish. I think it will make another run at 202, this time pushing through to previous highs around 208.
SOXL has strong upward catalysts in the form of strong earnings and guidance this quarter. MU got an earnings beat earlier this quarter, and its recent ascending triangle break suggests it may rise to 51.50, for $4 per share upside. (However, MU is 5% overvalued compared to its average analyst price target of $45 per share.) We've just had earnings beats from Taiwan Semiconductor, Texas Instruments, and Intel that imply the sector is recovering in the second half of the year. TSM has 17.5% upside to the average analyst price target! Intel-- SOXL's largest holding-- can still gain $2.50 per share before it reaches the average analyst price target. QCOM, another large holding, has 12.5% upside to the average analyst price target, with earnings coming up tomorrow. A beat by QCOM could trigger the run up through the 202 resistance level.
As always, this is just an idea about how the market will move, not investment advice.
Micron upgrade, call activity, and ascending triangle breakMicron (MU) got an upgrade to "strong buy" over the weekend from Zack's, the best-performing analytics firm. It also got some huge options volume today, targeting $49 and $55 per share. That's probably on the strength of both the Zack's upgrade and the stock's ascending triangle break. The triangle break implies an upside of about $6 per share from the current level.
Semiconductors need ascending triangle break to continueThe ascending triangle is one of my favorite chart patterns. To confirm a breakout, we need to enter the corner of the triangle and then break above the previous high that forms the top of the triangle. A confirmed breakout usually results in a move about half the height of the triangle, or about $9 per share in this case. One nice thing about this chart pattern is that it allows for a fairly tight stop loss. If we breach that lower trendline, the pattern is broken and we can exit quickly.
Semiconductors entering risky resistance zoneSOXL has good buying volume today, but it looks a little risky moving forward. It's entering a resistance zone from previous highs, and it's got some bearish divergences on the hourly MACD.
Daily RSI is nearing overbought, and daily MACD is nearing resistance at 9. SOXL is still bullish within the channel, but look for a good entry and keep stop losses in place to guard against channel exit.
Sell Broadcom on this Symantec Acquisition, $20B Down The TubesBloomberg broke the news on Wednesday July 3rd, 2019 that Broadcom is in talks to buy struggling Symantec. This is a terrible idea on many fronts and $AVGO closed down 3% on the news. I believe that investors do not want this semiconductor company to waste $20 billion on a cybersecurity company (and why pick the one that seems to be struggling the most?). Certainly makes sense that we head lower over the next few days/weeks.
A few references:
AbbVie buying Allergan - stock closed down 15%
Salesforce buying Tableau - stock closed down 3% (but it hasn't dropped further)
Intel above trendlineIntel leape above its trendline earlier today, but then bounced hard off channel top and back below the trendline. However, it's now peeking above the trendline again, which bodes well for tomorrow.
Trump's announcement over the weekend that trade talks are resuming is good for Intel not only because it offers the promise of resolving the trade war, but also because Trump immediately lifted the Huawei ban. Intel has lots of exposure to Huawei, and Broadcom recently revised its guidance downward because of the ban. With the ban lifted, we shouldn't have to worry about Intel doing the same.
Unfortunately, tomorrow is a "bear" day according to the Stock Traders' Almanac-- a day when the major market indices have declined in value more than 60% of the time. So based on those historical seasonal patterns, this is a risky trade.
Trade-war relief - July 2019Trump and Xi Ping have come to a tariff truce at G-20 this weekend.
Trump is now using Huawei (previously blacklisted, banned, etc.) as a bargaining chip, allowing TEMPORARILY, U.S. companies to continue doing business with China's Huawei.
Here is a list of Top 20 U.S. based Huawei suppliers . I believe most of them will rally this month (July 2019).
- Percentage number next to stock symbol is the revenue exposure to Huawei
Intel (INTC) - 1%
Advanced Micro Device (AMD) - 2%
Broadcom (AVGO) - 6%
Qualcomm (QCOM) - 5%
Microsoft (MSFT)
Nvidia (NVDA)
CommScope (COMM) - 2%
Texas Instruments (TXN)
Seagate Technology (STX) - 4%
Micron Technology (MU) - 2%
Qorvo (QRVO) - 11%
Flex (FLEX) - 5%
Skyworks (SWKS) - 6%
Corning (GLW) - 2%
Analog Devices (ADI) - 3%
NeoPhotonics (NPTN) - 47%
Western Digital (WDC)
Lumentum (LITE) - 11%
II-VI (IIVI) - 8%
Finisar (FNSR) - 8%
Maxim Integrated (MXIM) - 4%
Keysight Technology (KEYS) - 2%
Marvell Technology (MRVL) - 1%
Note: Trump can go back on the Huawei deal at any time.
MU - LONG - Double bottom to 52.50- Double bottom at support. Micron is ready to fly, but I will wait a lite pullback at 35.00-35.50
- Strong stock on strong indusrty (Semiconductor). MU as been upgraded by Needham, from hold to buy at 50.00 as target.
- Very trong fundamental :
> P/E 3.57
> EPS : 157.6% this year
Waiting for a lite pullback to buy and fly to 52.50 as potential and at is all time high at 64.50.
I will update it regularly. Follow MU for development.
I wish you a great trading day!
Waz-
AMD Bullish, Long, Fib+EW PredictionsrThis is not financial advise. For entertainment purposes only. MY OPINION
AMD has had some good news, and solid growth despite the trade war between US and China. Finding support at the .618 Fib retracement at the end of a rising wedge, especially to end the week or month, could spark a full breakout to the ATH of $47.50. However, when adjusted for inflation, that is $70.64 in today's USD. I'm setting next targets to watch between $36 and $42 if resistance is successfully broken here. Of course, this is all bearing that AMD continues to have few issues and the company stays profitable. Anything can happen over the course of a few years.
Upside breakout AMDAMD broke out of its downward channel today on the strength of a supposed earnings beat by MU. This may portend further moves upward by AMD.
Micron pops on non-GAAP earnings report gimmickMicron has been looking bearish in what appeared to be an emerging downward channel. However, after hours today it popped two and a half dollars per share on the basis of a supposed earnings beat. News outlets are reporting that earnings "crushed" estimates. The problem is that the analyst estimates are for GAAP earnings, and Micron's GAAP earnings missed by several cents per share. By disclosing non-GAAP earnings, Micron used a common gimmick to appear to have beaten estimates that doesn't reflect actual strength in the company's fundamentals. Whether investors will notice this is another matter, however. The stock may stay up tomorrow regardless. But I personally wouldn't invest in it.
To Micron's credit, it did slightly beat estimates of GAAP revenue even though it missed on earnings.
AMD downward channel breakAMD has been trying to turn negative for a few days, and it just got there. Likely to fall from here. It's got poor analyst ratings, so there's reason for the channel break.
NVDA in Upward Trending ChannelI think NVDA will likely step higher through resistance tomorrow, with more upside ahead. Pullback to the bottom of the channel offers a buying opportunity.
