| | | | Buyout Blackout?
We are getting into the thick of the corporate buyback blackout period. How long is it expected to last and what does the cycle look like for buybacks moving forward? Let's take a look…
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Chip Stocks at Risk: How the AI Narrative Is Losing Steam
The semiconductor sector has been riding a wave of hype fueled by AI narratives for some time now, but it’s finally starting to show signs of fatigue.
Stocks like Nvidia (NVDA) and ASML Holding (ASML) have seen dramatic run-ups — and then a big sell-off the past six months in ASML’s case — as investors scrambled to capitalize on the AI boom.
However, the momentum is slowing, and traders need to exercise caution as their charts suggest potential retracements and consolidation ahead.
Let’s Start With Nvidia
The stock has been a darling of the AI story, reaching new highs on explosive growth expectations. But here’s the reality — the narrative is losing steam, and we could see a deeper retrace soon.
Nvidia has struggled to maintain its upward trajectory, with resistance forming around key levels. Whether this is a temporary pullback or the beginning of a larger correction remains to be seen, but the risk of further downside is significant.
ASML, the Dutch semiconductor equipment manufacturer, is in a similar boat.
The company is facing challenges from export restrictions imposed by its home country and amplified by U.S. policies targeting chip technology. These protectionist measures — essentially subsidies in disguise — limit ASML’s market potential and have led to a noticeable pullback.
Until there’s clarity on regulatory actions, this stock could remain under pressure.
Broadly speaking, the Semiconductor sector appears choppy and uncertain. Many names are consolidating under major resistance levels, creating a precarious environment for traders. Even leveraged ETFs like SOXL are struggling to gain traction, reflecting the sector’s lack of clear direction.
It’s important to remember that AI-driven narratives, like the ones that propelled semiconductors, tend to have a limited shelf life. Investor fatigue often sets in after a few months, leading to retracements as the hype subsides.
While the AI trend isn’t over — the technology will undoubtedly play a major role in the future — the market may need time to reset before the next leg higher.
What should traders do?
Focus on confirmation before making any moves. Watch for retracements to key support levels, such as the 61.8% Fibonacci retracement line, to identify potential entry points. Also, keep an eye on regulatory developments, as policy changes can significantly impact these stocks.
The semiconductor space is still packed with opportunities, but it’s a minefield of risks as well. The hype is fading, and a correction could provide better setups in the months ahead. As always, patience and discipline will pay off.
Stay frosty, traders.
Today’s Daily Chart Setup: Credit Acceptance (CACC)
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