tech
Selling pressure for chip stocks is nearing exhaustion and a turnaround could be in the cards, charts show
Market sentiment is heavily bearish and semiconductors have suffered, but the darkest hour is just before dawn.
TL;DR
- Market sentiment is heavily bearish, but sustainable lows often form before sentiment improves.
- Semiconductor charts, particularly the VanEck Semiconductor ETF (SMH), show signs of approaching peak bearishness with a potential A-B-C correction pattern and support above the 200-day moving average.
- A ratio chart of SMH/S&P 500 indicates semiconductors are less bearish relative to the broader market, showing a sideways consolidation pattern that may break upwards.
- Nvidia (NVDA) is trading at a relatively cheap valuation with strong expected earnings growth, making its forward price-to-earnings ratio attractive compared to the S&P 500 and other companies like Costco.
- Combining fundamental analysis (long-term AI story, valuation) with technicals (support levels, chart patterns) offers an edge over emotional reactions to market news.