SOXX: 2024 Has Formed A Head And Shoulders Pattern (Technical Analysis)

seekingalpha11-23 01:14

SOXX has had an underwhelming 2024.It is closely correlated to MSFT which shows how much it relies on the hyperscalers.A large head and shoulders top is forming and the uptrend channel has broken. The...

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The...</p>\n\n<a href=\"https://seekingalpha.com/article/4739674-soxx-2024-has-formed-a-head-and-shoulders-pattern\">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>SOXX: 2024 Has Formed A Head And Shoulders Pattern (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\">\nSOXX: 2024 Has Formed A Head And Shoulders Pattern (Technical Analysis)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-23 01:14 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739674-soxx-2024-has-formed-a-head-and-shoulders-pattern><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SOXX has had an underwhelming 2024.It is closely correlated to MSFT which shows how much it relies on the hyperscalers.A large head and shoulders top is forming and the uptrend channel has broken. The...</p>\n\n<a href=\"https://seekingalpha.com/article/4739674-soxx-2024-has-formed-a-head-and-shoulders-pattern\">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":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4739674-soxx-2024-has-formed-a-head-and-shoulders-pattern","article_id":"2485294161","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1304192048/image_1304192048.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485294161","pubTimestamp":1732295658,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SOXX has had an underwhelming 2024.It is closely correlated to MSFT which shows how much it relies on the hyperscalers.A large head and shoulders top is forming and the uptrend channel has broken. The","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","SOXX":"iShares费城交易所半导体ETF","BK4588":"碎股"},"translate_title":"SOXX：2024已形成头肩形态（技术分析）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SOXX":0.9},"content_text":"SOXX has had an underwhelming 2024.It is closely correlated to MSFT which shows how much it relies on the hyperscalers.A large head and shoulders top is forming and the uptrend channel has broken. The technicals reflect a potential bearish shift.peepo/E+ via Getty Images  Many analysts picked semiconductors as the sector to own in 2024. That idea started well in January, but at the end of November, the iShares Semiconductor ETF (NASDAQ:SOXX) is trading where it was back in February. Moreover, it is forming a large topping pattern on the chart. This article looks at whether it is in trouble or just resting. Introducing SOXX SOXX provides \"exposure to U.S. companies that design, manufacture, and distribute semiconductors.\" It is a passively managed fund with a 0.35% expense ratio and AUM of $23.6B. I prefer it to the main alternative, the VanEck Semiconductor ETF (SMH) as it caps individual stock weightings to 10% and is slightly more diversified. Nvidia (NVDA) is weighted at 23% in SMH. SOXX's methodology is simple. According to the prospectus, it selects the 30 largest U.S.-listed companies that are classified according to the ICE Uniform Sector Classification schema within the semiconductors industry. There are additional rules for minimum market cap and liquidity requirements, which may be applied to the smallest companies in the holdings, such as Qorvo (QRVO) which has dropped 50% since July and now has a market cap of $6.2B. Its weighting is only 0.67% of the fund, so it won't move the needle on performance. However, it would be wrong to discount the smallest companies, as the bottom 12 collectively weigh more than NVDA. Here's the full list - iShares This explains why SOXX can trade around 25% below its 2024 high, even when NVDA made a new all-time high this week. SOXX Outlook The outlook for SOXX relies heavily on its top 5 stocks, not just because they are weighted around 40% of the fund, but also because they represent the trends within the sector. NVDA, in particular, has been the stand-out stock and the main beneficiary of hyperscaling by companies such as Microsoft (MSFT). Nvidia reported earnings this week and revealed that from $35.08B in total revenue, $30.8B came from data centers. Clearly, then, the construction and maintenance of data centers has to continue for SOXX to continue higher. Growth is bound to slow over the coming quarters as the Y/Y comparisons get more difficult, but the key going forward is that the spending continues and growth does not miss estimates. SOXX has a PE ratio of 33.44, so even a small slowdown could weigh. iShares I think growth in the coming year or two is fairly assured. More companies are becoming hyperscalers (there are now around 24) and there is no suggestion the likes of MSFT are done spending. CAPEX plans are huge. That said, MSFT and other major hyperscalers such as Alphabet (GOOGL)(GOOG) have been relatively weak in the second half of the year and are some way off their highs. After many years of outperforming, there is clearly a problem. This may be partially related to positioning and concerns over valuations, but the correlation between MSFT and SOXX suggests it is more to do with data centers. TradingView MSFT is weak because investors are concerned the CAPEX may not be justified. SOXX is weak because MSFT (and other hyperscalers) may slow their spending in response. Concerns are reflected on the chart, as SOXX has developed a recognizable head and shoulders pattern over the course of 2024. TradingView This pattern only triggers with a drop below the \"neckline\" which is at $200. If that were to happen, the target is around 25% lower to $150. Of course, this is not guaranteed, but the pattern's formation does suggest investors are nervous. A logarithmic chart also shows the trend is in danger of breaking. TradingView The two bounces off the bottom of the channel in August and September of this year led to lower highs, and the channel has now broken. Again, this is not a guarantee of a trend change, but it is a warning. If SOXX was merely resting due to overvaluation, it should really have resumed its trend from the lows of the channel. Now that NVDA has reported and SOXX is still near the November lows and below the October range, there doesn't seem to be much on the horizon to give it a lift. Seasonality is usually positive at this time of year, but not even that is helping. In short, I do not think SOXX is a compelling buy at these levels and there is a risk it rolls over further. If $200 breaks, the chart pattern suggests it could drop another 25%. Long-term, the next leg of the uptrend could take some time to set up and may hinge on how AI develops. At the moment, the uses are still limited and this is one reason why investors are getting nervous. At some point, I think there will be a major breakthrough that will drive the next phase of development, investment, and trend in SOXX. Conclusions  SOXX provides relatively diversified exposure to US semiconductor companies. Its performance is linked to hyperscalers, and it is very closely correlated to MSFT. Unfortunately, MSFT has been relatively weak in 2024, and it seems investors are concerned about the profitability of data center investments. SOXX has developed a large reversal pattern on its chart and the trend looks compromised. I would avoid the fund and sector for now and rate SOXX a \"sell\" until the outlook and trend are clearer.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"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":"4.29.2","shortVersion":"4.29.2","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/2485294161"}