Semiconductor stocks - Retracement done or still far away?
This week, the semiconductor industry saw notable developments as major companies, including Intel and TSMC, announced significant advancements in chip technology. Intel unveiled its latest generation of processors with improved performance and efficiency, while TSMC reported progress in scaling up its 3nm manufacturing capabilities. Let's look at the movement of several semiconductor stocks which might be at a good bargain.
NVIDIA
This week, NVIDIA announced a significant expansion of its AI-focused product lineup with the introduction of new GPUs designed to accelerate artificial intelligence and machine learning workloads. The company also revealed strategic partnerships with leading cloud service providers to enhance its AI infrastructure.
Nvidia daily chart
As shown in the chart above, since the bearish engulfing candle appearance towards mid of July, NVIDIA share price retraced continuously for 3 weeks. Currently, we can observe a clear downtrend pattern (drawn in ORANGE colour) in NVIDIA chart. As long as NVIDIA enables to breakout from its downtrend line resistance, I believe its share price will continue to pullback. The next nearest support for NVIDIA will be at 96.96 USD, in which I think NVIDIA $NVIDIA Corp(NVDA)$
AMD
In Q2 2024, AMD reported revenue and profitability growth, driven by strong sales of Ryzen CPUs and Radeon GPUs. They also provided positive guidance for future quarters.
AMD daily chart
For AMD, its share price is much weaker as compared to NVIDIA. A critical bearish sign in AMD chart in which we observe that AMD failed to sustain above its EMA200 trendline (green coloured line). Since April this year, AMD never failed to stand above to this EMA200. Even it retraced towards this line, the share price rapidly rebounded but it was no longer the case this time. The share price stayed well below EMA200 for over 10 days, with no sign of technical rebound at all! A firm bearish vote for AMD $Advanced Micro Devices(AMD)$
Intel
Intel will cut more than 15% of its workforce as part of its previously announced USD 10 billion cost reduction plan to increase efficiency and market competitiveness. Intel CEO Pat Gelsinger described the Q2 result has "disappointing", with second-half trends more challenging than we previously expected. Intel will also suspend its dividend, starting in the fourth quarter, noting "the importance of prioritizing liquidity" to support investments needed to execute its cost-cutting strategy.
Intel daily chart
As a dead cross occurred between EMA50 and EMA200, a mid to long term bearish movement for Intel is unavoidable. The share price began to rebound in early July but unfortunately it started to retrace upon touching EMA200 (green coloured line) resistance. A very bad news last night with its disappointing earnings, the share price collapsed with a huge gap down. The nearest support is at 20.47 USD which is pretty close right now. No point to rush into this stock for long-term. You may consider a oversold rebound play $Intel(INTC)$
TSM
Recently, TSMC reported strong financial results with significant revenue growth driven by high demand for its advanced semiconductor technologies. The company is expanding its production capacity with new facilities and investments in cutting-edge manufacturing processes. This positive performance and strategic expansion have boosted investor confidence, reflected in the favorable movement of TSMC's stock.
TSM daily chart
Similar to most of the other semiconductor stocks, TSM retraced significantly since early July. A dead cross between EMA25 and EMA50 is almost confirmed. For such, I believe TSM will probably continue to pullback until it touches somewhere near 140 USD which is also its EMA200 EMA support. Bearish vote for TSM $Taiwan Semiconductor Manufacturing(TSM)$
SOXL
SOXL is an ETF that offers 3x daily long leverage to the PHLX Semiconductor Index, making it a powerful tool for investors with a bullish short-term outlook for semiconductor equities. Investors should note that SOXL's leverage resets on a daily basis, which results in compounding of returns when held for multiple periods. SOXL can be a powerful tool for sophisticated investors, but should be avoided by those with a low risk tolerance or a buy-and-hold strategy.
SOXL daily chart
A massive strike on SOXL index due the significant pullback of semiconductor stocks. Bloody approximately 60% of correction from recent peak. The worrying thing was, this week SOXL failed to rebound at EMA200 (green coloured EMA line), and further plummeted last night. The semiconductor index is oversold due to the massive sell down this week. For such, I believe we might have SOXL $Semiconductor Bull 3X Shares(SOXL)$
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NVIDIA (NVDA) Stock Analysis:
Long-term Valuation: Analysts have provided a target price range for NVIDIA. The mean target estimate is $135.63, with a low estimate of $50.30 and a high estimate of $200.00. It is important to note that these target prices are provided by analysts and should be considered as their opinions.
Short-term Valuation: In terms of recent trends, NVIDIA's stock price has been in a downtrend since mid-July, as indicated by the bearish engulfing candle and the clear downtrend pattern on the chart. The stock has retraced continuously for three weeks. As of the latest data, the stock price is $107.27.
Capital Flow: The capital flow data for NVIDIA shows mixed results over the past five days. On July 26, there was a significant inflow of $114.67 million, followed by an inflow of $32.99 million on July 29. However, on July 30, there was a large outflow of $465.83 million. On July 31, there was a substantial inflow of $1.02 billion, but on August 1, there was an outflow of $820.32 million.
Based on the above analysis, it is important to consider both the long-term and short-term factors when evaluating NVIDIA's stock. The target price provided by analysts suggests potential upside, but the short-term downtrend and capital flow data indicate some uncertainty. Investors should carefully assess their risk tolerance and conduct further research before making any investment decisions.
Disclaimer: The above analysis and suggestions should not be considered as investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
SOXL (Direxion Daily Semiconductors Bull 3x Shares) Stock Analysis:
Long-term Valuation: Unfortunately, there is no specific long-term valuation information available for SOXL, such as target prices or earnings forecasts. It is recommended to refer to the latest analyst reports or consult with a financial advisor for a comprehensive long-term analysis.
Short-term Valuation: SOXL's stock price has experienced a significant pullback, with a correction of approximately 60% from its recent peak. The stock failed to rebound at the EMA200 (green colored EMA line) and further plummeted. The stock price as of the latest data is $29.34.
Capital Flow: The capital flow data for SOXL shows mixed results over the past five days. On July 26, there was a small outflow of $46.37 thousand, followed by a larger outflow of $32.69 million on July 29. On July 30, there was a further outflow of $69.60 million. However, on July 31, there was a significant inflow of $83.22 million. On August 1, there was an outflow of $104.52 million.
Given the lack of specific long-term valuation information and the recent downtrend in the stock price, it is important to exercise caution when considering an investment in SOXL. Investors should carefully assess their risk tolerance and conduct further research before making any investment decisions.
Disclaimer: The above analysis and suggestions should not be considered as investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.