SMH: A 'Blow-Off Top' Pattern Forming (Technical Analysis)

seekingalpha03-25

The VanEck Semiconductor ETF is forming a bearish technical pattern, which could signal the blow-off top.The recent bounce to a "lower-high" was on light volume, following the Fed's dovish stance at ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2422091541?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1885497422/image_1885497422.jpg","is_english":true,"pubTime":"2024-03-25 23:10","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2422091541","market":"sg","top_or_hot":-1,"title":"SMH: A 'Blow-Off Top' Pattern Forming (Technical Analysis)","media":"seekingalpha","content":"<div>\n<p>The VanEck Semiconductor ETF is forming a bearish technical pattern, which could signal the blow-off top.The recent bounce to a \"lower-high\" was on light volume, following the Fed's dovish stance at ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680264-smh-a-blow-off-top-pattern-forming-technical-analysis\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SMH: A 'Blow-Off Top' Pattern Forming (Technical Analysis)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSMH: A 'Blow-Off Top' Pattern Forming (Technical Analysis)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-25 23:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4680264-smh-a-blow-off-top-pattern-forming-technical-analysis><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The VanEck Semiconductor ETF is forming a bearish technical pattern, which could signal the blow-off top.The recent bounce to a \"lower-high\" was on light volume, following the Fed's dovish stance at ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680264-smh-a-blow-off-top-pattern-forming-technical-analysis\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0310799852.SGD","symbol_name":"FTIF - Templeton Global Equity Income A MDIS SGD","start_time":0,"source_url":"https://seekingalpha.com/article/4680264-smh-a-blow-off-top-pattern-forming-technical-analysis","article_id":"2422091541","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1885497422/image_1885497422.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2422091541","pubTimestamp":1711379413,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The VanEck Semiconductor ETF is forming a bearish technical pattern, which could signal the blow-off top.The recent bounce to a \"lower-high\" was on light volume, following the Fed's dovish stance at the March meeting.The GenAI theme appears to be limited to only to \"Consumer AI space that has very few players,\" and there is \"no real tangible business case\" for Enterprise AI.   hapabapa Was March 8th the blow-off top?The VanEck Semiconductor ETF , which tracks the performance of the MVIS US Listed Semiconductor 25 Index, is possibly forming a blow-off top pattern. After a sharp reversal on March 8th, SMH bounced weakly in reaction to the Fed's dovish meeting, which appears to be a \"lower high..\" The pattern must be confirmed with a \"lower-low.\"   Barchart Nvidia  is by far the most influential individual stock, representing over 20% of the VanEck Semiconductor ETF. Taiwan Semiconductor Manufacturing Co Ltd ADR  represents around 12% of the ETF, while Broadcom  around 7%. Together, these","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0310799852.SGD":"FTIF - Templeton Global Equity Income A MDIS SGD","TWM":"罗素2000指数两倍做空ETF","SMH":"半导体指数ETF-HOLDRs","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","03145":"华夏亚洲高息股","TNA":"罗素2000指数三倍做多ETF-Direxion","TSM":"台积电","LU0511384066.AUD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (AUDHDG) ACC","MSFT":"微软","UWM":"罗素2000指数ETF两倍做多","IWM":"罗素2000指数ETF","AVGO":"博通","FDN":"First Trust Dow Jones Internet I","RWM":"罗素2000指数反向ETF","TZA":"罗素2000指数三倍做空ETF","IWN":"罗素2000价值股指数ETF-iShares","IWO":"罗素2000成长股指数ETF","GOOG":"谷歌","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","META":"Meta Platforms","LU2491050071.SGD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (SGDHDG) ACC","LU2491050154.USD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (USD) ACC","LU0264606111.USD":"Janus Henderson Horizon Asian Dividend Income A2 USD","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","NVDA":"英伟达","INTC":"英特尔","BK4514":"搜索引擎","SRTY":"罗素2000指数三倍做空ETF-ProShares","PEGI":"Pattern Energy Group Inc."},"translate_title":"SMH：一个“吹顶”模式的形成（技术分析）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AVGO":1,"TSM":1,"SMH":1,"PEGI":1,"NVDA":1,"MSFT":1,"META":1,"IWM":1,"INTC":1,"GOOG":1,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"US6M.BOND":0.9,"US7Y.BOND":0.9,"FDN":0.69,"US912797FS14.BOND":0.6,"US912797FH58.BOND":0.6,"US912797GB79.BOND":0.6,"US912796CX52.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HH31.BOND":0.6,"UWM":0.6,"TWM":0.6,"IWN":0.6,"IWO":0.6,"TZA":0.6,"MRTYmain":0.6,"MNQmain":0.6,"RWM":0.6,"SRTY":0.6,"TNA":0.6,"03145":0.6},"content_text":"The VanEck Semiconductor ETF is forming a bearish technical pattern, which could signal the blow-off top.The recent bounce to a \"lower-high\" was on light volume, following the Fed's dovish stance at the March meeting.The GenAI theme appears to be limited to only to \"Consumer AI space that has very few players,\" and there is \"no real tangible business case\" for Enterprise AI.   hapabapa Was March 8th the blow-off top? The VanEck Semiconductor ETF (NASDAQ:SMH), which tracks the performance of the MVIS US Listed Semiconductor 25 Index, is possibly forming a blow-off top pattern. After a sharp reversal on March 8th, SMH bounced weakly in reaction to the Fed's dovish meeting, which appears to be a \"lower high..\" The pattern must be confirmed with a \"lower-low.\"   Barchart Nvidia (NVDA) is by far the most influential individual stock, representing over 20% of the VanEck Semiconductor ETF. Taiwan Semiconductor Manufacturing Co Ltd ADR (TSM) represents around 12% of the ETF, while Broadcom (AVG0) around 7%. Together, these three stocks represent almost 40% of SMH. Thus, the performance of SMH is significantly influenced by NVDA. Did Nvidia stock (NVDA) also reach its peak on March 8th? As I noted, NVDA also had a sharp random reversal on March 8th, about 10% from top to bottom, The price reached $971 per share on the intraday high and it's still below that level. There were no new related announcements on March 8th or the day before. Thus, if this proves to be the actual top, it would be completely random. In the previous article, I've discussed the \"fundamental hook\" for NVDA, analyzed the technical pattern, and also offered the view from the market microstructure model. My conclusion at the time was that there was not enough evidence to assume that the March 8th reversal was the blow-off top: Overall, the Nvidia Corporation fundamental hook is still valid and as long as the uptrend holds, the NVDA bubble could continue. Furthermore, there is still no evidence that the Fed is willing to accept the tightening financial conditions, and thus, the broader speculative frenzy is still intact. Thus, at this point it's premature to conclude that the NVDA had the blow-off top on Friday. I also noted that:  The key is now how trend-followers behave. They use technical analysis - and they see the big reversal on heavy volume. If they decide to take the profit, the price pattern will turn bearish - either double top, head-and-shoulders, or just a lower-lows breakdown. More importantly, the trend-followers could start to short in this situation - which could accelerate the crash. The rational speculators, institutions promoting the stock, might also rush to sell, or possibly realize that they are unable to take profit and buy more to create a positive technical picture and induce more trend following - which could extend the bubble.  So, let's look at the updated chart to see what pattern developed after the March 8th selloff. It looks like we have a \"double top,\" with the lower high forming at the moment. The March 8th selloff was on a very heavy volume, and the recent bounce was on a much lighter volume. Barchart Of course, another person could also see the breakout from the temporary pause, and the uptrend continuation. Given the light volume at the bounce, it is more likely the trend will reverse. The fundamentals Nvidia recently released the report GTC Financial Analyst and essentially predicted the New Industrial Revolution, where the GenAI would trigger a wave of startups, and eventually a $100T market opportunity - and the Nvidia chips are at the center of it all. Nvidia But what is the reality? Another recent report by Broadcom (AVGO) Enabling AI Infrastructure Investor Meeting describes the GenAI reality (emphasis added):  The way we look at this market is, it is composed of two distinct markets. One is the consumer AI space. And this is a space that has very few players, but these few players have billions of users. And the way they make money is based on ad and end-user and consumer engagement. The interesting thing over the past few years that we've learned with them is that engagement is directly coupled to the amount of investment that they put in artificial intelligence and machine learning. And as a result, each of these consumer AI players, who are the majority of the market today are investing tens of billions of dollars in this space. The other market is on the enterprise side, which could be cloud or on-prem. In this space, a lot of people are trying to invest in AI, but to be honest with you, the business case is yet to be proven. I think there's lots of initiatives, AI initiatives. I've spoken to several CIOs yesterday. It's still wait and see. Each of these folks are building small clusters to trial these. Even the cloud guys are trialing some, but there is no real tangible business case as we see on the consumer AI.  Broadcom So, essentially the tech giants like Meta Platforms (META), Microsoft (MSFT) and Alphabet (GOOG) are spending billions so they can improve their \"engagement\" or \"search\" services. That's basically the big hype about the GenAI. There is \"no tangible business case\" for enterprise AI solutions at this moment, and thus no broader adoption is anticipated, beyond social media, customer service, and search. Currently, these tech giants are training their AI-models, and during the next stage they will use the \"trained models\" on the real data to \"reason\" or \"infer\" something from the data - so they can have better customer engagements (ad targeting?). Naturally, since these tech giants are spending billions on GenAI, Nvidia has been selling lots of chips, and other companies in the supply chain are making profits as well. But what happens next? First of all, the use of these AI models could be banned in the EU due to the new EU AI Act, and the global regulation will not stop there. Second, after the initial surge in investments, companies like META are likely to learn during the inference stage that the GenAI costs outweigh the benefits, especially if the new super chips cost $30-40K. The GenAI can only become a true opportunity with the enterprise AI and a broader adoption. Broadcom says we are not there yet. SMH components - valuations Nvidia had outstanding growth in earnings (585%) and sales (125%) over the last year. That's because when the tech giants like Meta and Microsoft decided to suddenly invest billions in GenAI, they found that Nvidia is basically the only company able to immediately supply the GenAI-appropriate chips. But obviously these growth numbers are not sustainable. First, after the initial surge in investment, it is likely that the investment in the GenAI would slow, as previously discussed. Second, the competition from other producers is likely to eventually catch up, and create a glut of chips. Based on the traditional valuation metrics, the Nvidia stock is a bubble - which makes SMH a bubble as well. The NVDA ttm PS ratio is at 37, which is a bubble as an absolute metric, and also relative to its peers - the ttm P/S ratio for AVGO at 14, TSM at 9, AMD at 12, and Intel (INTC) at only 3. I'm looking at a simple P/S ratio because it tells you what price you are paying today for the sales over the last 12 months. Thus, a high P/S ratio implies high sales growth expectations, and thus high profits if the company is able to maintain or expand the margins. The forward P/S ratio for NVDA is 20 - still a bubble, given that longer-term sales growth expectations are irrational, as previously discussed. Seeking Alpha Implications Fundamentally, the GenAI adoption seems to be limited to customer AI related applications, like social media engagement and search - that's based on the Broadcom report. Thus, a broader adoption for business use is not expected at this point, which is negative for longer-term sales growth for the key SMH component NVDA, and does not support the bubble-like valuations. However, The Fed is seemingly allowing the bubbles to inflate (based on the March FOMC meeting dovish stance), which works against the SMH and NVDA March 8th top thesis. In fact, the recent light-volume bounce in NVDA followed the Fed's dovish meeting in March. Yet, the market broadening thesis quickly reversed with Russell 2000 (IWM) falling 1.3% on Friday, which suggests that the SMH bounce is likely to be reversed as well. Technically, the NVDA double top pattern with lighter volume on the bounce and, thus, the SMH's \"lower-high\" suggests that the March 8th intraday high could be the top. Thus, my rating for SMH is a Sell. The risk to the negative outlook is twofold. First, the SMH bubble is more likely to be busted with a disappointing earnings report from NVDA or another GenAI-themed firm, and we don't have any negative guidance yet. Second, the Fed's dovishness could continue to inflate the all-financial bubbles. Thus, obviously, a \"higher-high\" pattern on SMH invalidates the negative outlook.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422091541"}