Yesterday was a great session, and here’s why. The flush in semiconductor names didn’t trigger a market-wide collapse; instead, 71% of the S&P 500 (SPX) closed higher as money rotated.

Down But Not Out

Semiconductors (SMH) were walloped, but most closed well off the lows of the session – you can bet those buyers were wide-eyed novices taking the plunge on a hunch.

There is just so much fast money in the chip trade; these wild swings are unavoidable. Consider that 68% of the $68.0 billion cumulative tally that’s flowed into semiconductor exchange-traded funds (ETFs) since 2017 has occurred this year. The fundamentals are improving, the visibility is lengthening, and these stocks are getting much cheaper.

Chips In Demand

Graphics Processing Unit (GPU) rentals are surging, as demand is unwavering. 

After the close, initial reactions to earnings results:

• Teradyne Inc (TER) +13%
• Seagate Technology (STX) +8%
• Bloom Energy (BE) +15%
• KLA Corp (KLAC) -8%

Compelling

Action in education technology caught my attention. We will delve deeper, as the niche areas hold the most gold these days. On that note, the health craze is real, too.

Themes

With software (IGV) and data companies enjoying strong rebounds at the expense of semiconductor stocks, it isn’t logical to argue there will be more NAND, cheaper chips - and more robust artificial intelligence (AI) - as a reason to sell chip stocks and to buy those most vulnerable to such a development.

Today is Fed Day, and a line has been drawn in the sand, and lots of folks are on the side of a rate hike today.

I’m not there.

Today’s Session

The market is set to open with continued tepidness. More folks are calling for a rate hike this morning, including Citadel.

It would be uncommon for the new Fed Chair to guide the FOMC to hike rates, but that hasn’t always been the smart move. 

Warsh wants to put his stamp on the Fed, which means not doing business as usual, including following the last chair’s path.

This is going to be exciting.

Make sure to catch my coverage at 2 PM on Fox Business.

Earnings Season

Mixed reactions to earnings – one thing for sure: beating on the top and bottom and offering higher guidance is not a free pass from selling.  Therefore, names higher on their earnings print should be watched closely on everyone’s buy list.  This doesn't mean lower-ranked names should be dumped or avoided; on the contrary, most are oversold, and there is no urgency or need to be a hero right now.

Some big names posting results after the close.

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.