Semiconductor sector sees worst day in 7 weeks: Top takeaways

Thursday saw the worst trading day for the semiconductor sector in seven weeks. Earnings revisions for some of the top tech stocks like Nvidia (NVDA), Amazon (AMZN), Meta (META), and Alphabet (GOOG, GOOGL) are currently over 35% higher than that of the entire S&P 500 (^GSPC).

Yahoo Finance Reporter Jared Blikre joins Asking For A Trend to break down the market trends of the trading day.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Nicholas Jacobino

Video Transcript

Moving on you.

Finance is Jared Blicker is joining us here now with more on the trading day takeaways, Jared bad day for semis.

In fact, I’m calling it the Chip Apocalypse.

And I say that a little bit tongue in cheek because it was not a disaster, but we’re not used to seeing this much red on our heat maps uh screen and there you can see it right there.

Just wanna quickly plot the price action in NVIDIA and I’m gonna show you a two month chart with candlestick.

So you can see this big red candle right here and I wanna show you another one on a year to date chart.

You can see we have one right here.

So sometimes these are the beginning of a consolidation or minor correction period.

And Josh, that’s what we could be seeing here right now.

How about a MD?

Wasn’t that another name on your radar?

You know what?

Look at a MD, look at all this right on the screen.

There’s a MD.

My guess is this is the reaction in some kind of Paris trade.

You can see it’s up today 4.62% up 10% year to date.

But that is a far cry from NVIDIA.

By the way, I gotta mention too, tomorrow is a huge options, expiration and also a rebalance for a lot of S and P in indices.

So NVIDIA has been um there’s kind of this virtuous cycle.

This is a year to day chart where people are buying call options in NVIDIA and the dealers, the market makers who sell those call options, they have to cover them and they buy the underlying stock.

And so this creates this virtuous cycle of higher prices in the stock that’s gonna stop tomorrow.

So that on Monday, NVIDIA is going to be able to trade more freely to the upside and to the downside.

All right, a lot to watch Jared blick point number two.

You bet this is uh something funny I came across in a Goldman note, this is the yachts versus the have yachts.

Normally we talk about the haves and the have nots.

No, this is the yachts versus the have yachts.

And uh here we have the earnings revisions.

This goes back to June of last year and we have the top five stocks in the US Microsoft NVIDIA Amazon Google Meta versus the rest of the S and P five hundreds.

Story continues

And these are earnings revisions.

So we can see on those top five stocks that’s up 38% and the 495 down 5%.

That does that surprise you you know, what surprises me is that the gap is actually this big, that is just a huge chasm there.

And it makes you wonder are any other stocks participating in this?

Probably besides those five.

The answer is yes.

So, you know, on average, maybe the average is zero, but there’s some more stocks that are participating, but just real quick, this also ties into one more phenomenon and that is the Dow versus the NASDAQ today.

Guess what?

The NASDAQ was down 1/10 of a percent.

The dow was up 1/10 of a percent.

So, all kind of ties together here.

All right.

The final Jared bickering point.

Yes.

Yes, we have bullish seasonality on deck in July.

So just thinking a, a week or two ahead here for the month of July, uh, this compares the 1st 10 and the last 10 trading days of each month.

So we got 24 bars here, two for each month.

What you’re gonna notice is July, that’s the 1st 10 days of July.

That is the biggest bar.

So going back to 1928 that is the most bullish period to be in the market doesn’t mean that we have to go up, but that is just a huge tail wind.

Do you, do you let me ask you a seasonality?

We talk about it so often, isn’t that priced in or why isn’t it priced in?

Given the amount of times we talk about it?

Jared.

Yeah.

The thing is, I don’t know that you can ever price anything in Foley.

I think it’s just kind of a tail wind.

So, I’ve seen studies done, uh, where it shows that about, about one third of market gains can be attributed to seasonality, but that’s not even close to 50%.

So, it’s just something that kind of helps you along.

If there’s big news to the contrary.

Guess what?

We’re not going to go there.

I want to get out of here.

Didn’t, didn’t the Great Ryan Dietrich have some other thoughts, I believe.

Yeah.

Other thoughts that are very similar in conclusion.

Can this rally continue?

Be aware that July has been up nine years in a row for the S and P 500 up 3.1%.

Kind of a similar chart to the one we just showed, uh, in this, this chart.

November is actually bigger.

But suffice to say July beginning of the July should be a nice window for stocks, all things, uh, being, uh, considered equal.

You can always count on Dietrich to come with the Boss Ryan Dietrich.

Thank you, Jared.