The most important company in the semiconductor sector (and, not coincidentally, the most valuable company on the planet) is Nvidia. It seems to have lost its mojo lately.
Last week, on Wednesday after the close, it presented knocked-it-out-of-the-park earnings. In response, on Thursday, the stock vaulted to a lifetime high, only to end the day lower than it opened. It sank more on Friday. It sank more yesterday. And it’s down right now. What’s key is the purple trendline; break that, and then the selling can really begin.
The broader fund SMH, of which NVDA is the biggest component, has already broken its corresponding trendline. For eight trading days, SMH has remained under both the broken trendline and the horizontal at 248.19. I own March $265 puts on this.
Stripping away the price data and drawn objects, and looking only at the trio of exponential moving averages, we can see that everything remains bullishly configured, but the 50- and 100-day EMAs are drawing closer together. A negative crossover of these would add evidence to the bearish case.
Advanced Micro Devices (AMD) is another intriguing short. I’ve got March $145 puts on this, and its own trendline failure is significant. This entire sector strikes me as past its peak.
I dumped my ARM puts yesterday morning, and I’m pretty sure I’ll regret that. What bothered about its price action on Friday and Monday was the intrusion into the topping pattern. I’m going to keep my distance but still am interested to see which way this thing turns, since it has had a good history with reversal patterns in the past.
I would also note that the company-that-totally-missed-the-boat, Intel (INTC) has received yet more billions from the U.S. Government. It’s odd that the government just can’t stop itself from supporting losers. As you can see, the market is unimpressed at this latest grift, since even a pile of free money can’t move the stock.
