The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

The Semiconductors Have Topped; Look Elsewhere For Opportunities

by admin June 23, 2024
June 23, 2024
The Semiconductors Have Topped;  Look Elsewhere For Opportunities

Extremely heavy volume that accompanies a gap higher and a reversing candle after a lengthy uptrend is typically a sign of buyers’ exhaustion and a much more aggressive group of sellers. The longer and more impressive the rally leading up to the reversal, the more likely the top may last for a significant period of time. Check out the daily chart Friday on the Dow Jones U.S. Semiconductors Index ($DJUSSC):

I wrote about this group in our Friday EarningsBeats Digest newsletter and declared a short-term top, possibly even an intermediate-term group. A seasonality chart that backs up a possible fall based on technical data is as follows:

This seasonality chart covers the past 12 years, or since 2013, and it’s a relative chart – illustrating how the semiconductors perform RELATIVE to the S&P 500. 2013 is the year that this secular bull market began and semiconductors have been a HUGE reason why the last dozen years have been so strong. If you look closely at this seasonality chart, you’ll see a pattern where this group LOVES the second month of each calendar quarter. The stock market itself tends to perform best in the first month of calendar quarters. Semiconductors are different, however, and the following illustrates this point:

Relative Performance of Semiconductors By Month of Calendar Quarter

  • Month 1 (January, April, July, October): -1.0%
  • Month 2 (February, May, August, November): +13.3%
  • Month 3 (March, June, September, December): +3.4%

Care to guess when you should consider being overweight semiconductors? Hopefully, it’s obvious.

NVIDIA Corp (NVDA) is the primary leader in semiconductors and here’s its seasonal performance since 2013:

Keep in mind that this seasonal chart is based on NVDA’s absolute price performance, not relative. Here’s the NVDA breakdown by months of calendar quarters:

  • Month 1 (January, April, July, October): +16.2%
  • Month 2 (February, May, August, November): +40.2%
  • Month 3 (March, June, September, December): +6.9%

My rationale for the strong semiconductor performance in second months within calendar quarters is that NVDA typically reports earnings in the second month of calendar quarters. For example, NVDA reports its next earnings on August 21st (2nd month in Q3). The pre-earnings moves to the upside occur later for NVDA than many other stocks, because others tend to report their results in the first months or very early in the second months of calendar quarters. Therefore, the timing of accumulation can be quite different.

In my opinion, the semiconductor trade is WAAAAAAY too crowded now. I’ve made money there and am now planning to stay away. Instead, I’m going to focus on areas showing strength that also perform well during the first months of calendar quarters. After all, July is the first month of Q3 and it’s rapidly approaching. As money rotates away from semiconductors, there’ll be a ton of money finding a new home.

Opportunity Ahead

I firmly believe that the current secular bull market isn’t going to end. Instead, as semiconductors weaken, other areas will step up to help carry the load. One sector, somewhat forgotten currently, has generated nearly all its gains over the past 20 years from the first months of calendar quarters. And one stock within the sector LOVES the month of July, rising 14 of the last 15 years and producing an average July return of 5.6% over the past 15 years. I see a big month ahead and will be providing the stock Monday in our FREE EB Digest newsletter. If you’re not already an EBD subscriber, CLICK HERE to start your subscription for FREE (no credit card required) and receive the stock on Monday.

Also, for more trading ideas ahead as money rotates, please review my Weekly Market Recap video at YouTube this weekend, “Semiconductors See A Euphoric Top, Opposite George Week Works Again!”. There’s great incentive to check out this video as you’ll catch me making my singing debut at the 50 second mark of the video! Please make sure you lock your pets away prior to turning up the volume!

Happy trading!

Tom

0
FacebookTwitterGoogle +Pinterest
previous post
Gilead’s Game-Changer: What You Need to Know About the Stock
next post
Week Ahead: NIFTY Show Evident Signs of Fatigue; Guard Profits & Keep Looking for Relative Strength

Related Posts

This Industry Just Broke Out And Is Poised...

November 15, 2024

COMMUNICATIONS SECTOR JOINS TECHNOLOGY SECTOR TO HELP BUOY...

July 2, 2024

Pullbacks & Reversals: Stocks Setting Up for Big...

July 1, 2025

Lagging Mid-cap ETF Hits Moment of Truth

June 23, 2025

What Does This Mean for the S&P 500...

August 21, 2024

Small Caps Breaking Out BULLISH

March 8, 2024

With 2024 Q2 Earnings In, Market Remains Very...

October 2, 2024

Could U.S. Stocks Crash In October?

September 28, 2024

Breadth Thrust Can Validate a New Bull Phase...

June 15, 2024

Transform Your Investing Strategy: Uncover the 3 Game-Changing...

March 11, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • The Real Drivers of This Market: AI, Semis & Robotics

      July 21, 2025
    • What Musk’s fracture with Trump means for GOP’s future: ‘Beating heart of the Republican Party’

      July 21, 2025
    • Trump’s housing chief rips Powell for blowing millions on Fed facelift during housing crisis he perpetuates

      July 21, 2025
    • Trump celebrates 6 months back in office: US ‘totally revived’ after being ‘DEAD’ under Biden

      July 21, 2025
    • Biden admin spent hefty sum of US tax dollars to upgrade embassy swimming pools in Iraq, Russia

      July 21, 2025
    • Trump heads to Scotland, continues ironing out trade deals after notching six months back in office

      July 21, 2025

    Categories

    • Business (1,299)
    • Politics (4,040)
    • Stocks (1,535)
    • Uncategorized (45)
    • World News (1,292)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved