|Day's Range||19.05 - 19.10|
The U.S.-China trade deal plays a profound role in the performance of the semiconductor sector given their exposure to China. "Due to their considerable exposure to the Chinese market and a heavily intertwined supply chain in Asia, semiconductor stocks have seen collateral damage as the US-China trade spat has escalated," said a Direxion Investments "Xchange" post. "To make matters worse, semiconductors are effectively everywhere today from computers to smartphones to televisions," the post added.
While markets have had a choppy week, 2019 has revealed some outstanding performers in certain underrated sectors. Technology and healthcare have been solid spaces to invest in, despite how the headlines might appear.
Semiconductor stocks have been held hostage by the China-U.S. trade war for over a year. We now live in a connected world so the market fears are legitimate since most of the semiconductor stocks' profit and loss statements depend heavily on what happens to the commerce with China. There are not only revenue repercussions but supply chain concerns. So the bullish thesis for the semiconductor sector has to include a reasonable resolution to the conflict. With so much on the line, I bet that the governments will eventually come to some sort of boring agreement that saves face for both sides.Meanwhile there are semiconductor stocks to buy even here. * 7 Stocks to Buy Under $10 This week Micron will report earnings and this will matter to the entire chip sector as a whole. What they say about business going forward will resonate loudly throughout the charts of Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA), and Advanced Micro Devices (NASDAQ:AMD) to name just three. Today I dissect trading MU, AMD and INTC stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Micron (MU)MU stock goes in and out of favor often among investors on Wall Street. It has always been a value stock, which is code for not getting the respect it deserves. So value alone is not reason enough to chase upside. Recently MU rallied above $48 per share and this week it may have the opportunity to prove that it belongs up here with its earnings report on September 26.So on Thursday, the bulls have a chance to prove that they can hold $48 per share as forward support. If so, then the upside potential for MU stock can be another 10% or more. Since the short-term reaction to these events is always a coin flip, this is a binary trade when they report earnings. We don't know what the company is going to say, nor do we know how investors will react to it. If Micron stock falls below $48 then it would be vulnerable to a 10% correction that would fill gaps below.The MU event also offers opportunities to trade other semiconductor stocks like INTC and AMD. Those two are viable proxy bets to the MU earnings report. Advanced Micro Devices (AMD)AMD stock has been the chip champ for two years. It has out-performed even during times when the markets in general were falling. AMD is up 140% in two years which is five times better than its closest competitor.This week, AMD stock has tightened into a point. Meaning there is a move coming but the direction is yet to be determined. If the reaction to Micron is positive then AMD can breakout from its $32 resistance zone. This could also reignite the rally to target $40 per share or more. Conversely, if the bears are able to push AMD below its recent support near $29.20, then shares could fall another $2 from there.This is all to say that there is an opportunity to trade AMD for the short term. Long term, it remains a buy in my book. So, I will buy-the-dip if it comes this week. Ideally, I would sell premium into the downside fear. For example I can sell the November 26th downside put for over $1 per contract. This would be a rinse-and-repeat trade for me, and I would reopen if the bears punish AMD stock this week. * 7 Worst Stocks in the S&P 500 in 2019 Meanwhile, if I am long AMD stock as a long term investment then I would not change my stance just for the Micron earnings uncertainty. If adding a new position, I would employ a tight stop below $29. This way if it spikes then I'm I already on board, else I get stopped out with minimal damage. Intel (INTC)There is a similar setup in Intel stock, but I don't like the overall body language of this stock. AMD has the advantage of Wall Street loving its current management whereas INTC management is in flux. Nevertheless the upside opportunity in INTC stock is at $53.50. If the bulls are able to take it above that they could cover the gap to 58 quickly. Conversely, there are gaps below that would bring INTC stock back down to is $47 neckline from just a few days ago.The outcome of Intel stock this week just like AMD revolves around what happens on Friday morning when Micron trades its earnings results. Fundamentally, all three stocks belong at least at these levels, but the headline risk is still binary as it always is with earnings reports. Investors love to extrapolate the results of one company into another which is almost always a mistake. In any of these cases, I would wait for confirmation of the breakouts or breakdowns before chasing them.Jumping the gun can be costly. These are momentum stocks so when they run they do it fast and long. So discipline is important when trading them especially for the shorter term. Value alone is not an argument for support so it's more important to pay more attention to the actual technical levels on the charts.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy Under $10 * 30 Marijuana Stocks to Buy as the Future Turns Green * 7 Consumer Stocks Ready to Rally Hard The post 3 Semiconductor Stocks to Trade Ahead of Micron Earnings appeared first on InvestorPlace.
Little change occurred among top stock funds during the past month as the major market indexes rallied back near all-time highs.
Traders are always on the lookout for the next short squeeze candidate. Short squeezes can send share prices skyrocketing in a matter of minutes and hours, and traders who are along for the ride can make ...
For all the talk about the technology sector's vulnerability to the U.S./China trade war -- and that assessment is credible -- the group hasn't been as bad as some investors are led to believe. In August, a rough month for equities at the hands of trade tensions, the tech-heavy Nasdaq-100 Index lost 1.4% while the Technology Select Sector SPDR (NYSEARCA:XLK), the largest tech ETF, was lower by 1%.Obviously, those are not numbers to write home about, but they speak to the point that tech ETFs have not been as awful as some investors have been programmed to believe. Plus, there are positive signs emerging, such as Apple (NASDAQ:AAPL) tapping debt markets for $7 billion and analysts waxing bullish about that stock, Intel (NASDAQ:INTC) and other big-name tech fare.Of course, relying on resolution to the trade spat to fuel tech ETFs can be a volatile bet. As volatile as, say, President Donald Trump's Twitter fingers. And all of this is ignoring the headline risk of government regulation stepping into some of the biggest players.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Industrial Stocks to Buy for a Strong U.S. Economy Yes, tech ETFs could use a boost via a cooler trade environment and less headline risk, but there are some solid fundamentals remaining in the sector. That makes some of the following tech ETFs worthy of consideration over the remainder of 2019. Tech ETFs to Buy: VanEck Vectors Semiconductor ETF (SMH)Expense Ratio: 0.35%Semiconductor stocks have been front and center during the trade controversy, but the reality is the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH) lost just a third of a percent last month, and there are reasons to be optimistic about chip stocks. Adding to the case for this tech ETF is that semiconductor demand is usually strong in toward the end of the year, a scenario that should it repeat, would defy calls for slack demand.Another iPhone demand cycle coupled with ongoing 5G investments are among the factors that should support chip demand over the next several months. Increased data center spending, discussed here, also has the potential to support tech ETFs and chip names over the near- to medium term.Additionally, SMH is technically healthy relative to other tech ETFs. The fund resides well above its 200-day moving average and just 6.2% below its 52-week high, indicating more new highs before the end of 2019 are not an unreasonable expectation. Global X Cloud Computing ETF (CLOU)Expense Ratio: 0.68%One of this year's most successful new ETFs, the Global X Cloud Computing ETF (NASDAQ:CLOU) has over $500 million in assets under management following its April debut. This tech ETF currently resides about 8% below its highs due in large part to valuations concerns in the Software-as-a-Service (SaaS), a major area in CLOU.Broadly speaking, cloud stocks are growth fare, leaving the door open for some retrenchment when investors favor more defensive, lower-volatility strategies. Conversely, CLOU is backed by an enticing, fundamentally sound long-term proposition. * 7 Deeply Discounted Energy Stocks to Buy "The global cloud computing market is estimated to be worth well-over $300 billion by 2022, up from about $188 billion today and growing at a compound annual growth rate (CAGR) of 14.6%," according to Global X research. WisdomTree Modern Tech Platforms Fund (PLAT)Expense Ratio: 0.45%Another rookie tech ETF, the WisdomTree Modern Tech Platforms Fund (NYSEARCA:PLAT) debuted in May and takes a unique approach to tech investing, opting to focus on asset-light, transformative, platform-based business models."WisdomTree defines a modern technology platform as a company with a non-linear, multi-sided business model focused on creating value by facilitating interactions between two or more interdependent groups through technology," according to the issuer.PLAT is not a dedicated tech ETF, as it features exposure to six sectors with communication services and consumer discretionary combining for 57% of the fund's weight."The structural advantages of the platform-based businesses we seek to invest in can be reflected in financial metrics through robust revenue growth, margin expansion, substantial free cash flow generation and strong returns on capital," WisdomTree said. iShares U.S. Technology ETF (IYW)Expense Ratio: 0.42%A decent idea for the investors looking for basic tech exposure via the ETF wrapper, the iShares U.S. Technology ETF (NYSEARCA:IYW) is often known for its large combined weight to industry behemoths Microsoft (NASDAQ:MSFT) and Apple. Those stocks combine for nearly a third of this tech ETF's weight.Of course, those are quality stocks, as is much of IYW's lineup, in a sector not known for being a value play. But investors should not be put off by the valuations on some of IYW's marquee holdings. * 7 Best Tech Stocks to Buy Right Now "The sector trades at approximately 21.5 times trailing earnings and 20 times forward earnings. Current valuations compare favorably with the long-term average but look elevated relative to the post-crisis norm," according to BlackRock. "The sector trades at a 10%-15% premium to the broader market. This is above the post-crisis average of about 4%. That said, it is worth noting that relative value looks more compelling based on other metrics, notably price-to-cash-flow. On this metric the sector's current relative valuation is below the post-crisis average." Invesco DWA Technology Momentum ETF (PTF)Expense Ratio: 0.6%It might appear to be reasonable to assume that the combination of technology stocks and momentum was punitive for the Invesco DWA Technology Momentum ETF (NASDAQ:PTF) in August, but the opposite is true. This tech ETF actually outperformed more prosaic rivals, losing just a third of a percent in the eighth month of the year.PTF follows the DWA Technology Technical Leaders Index. That benchmark "designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 securities from the NASDAQ US Benchmark Index. Relative strength is the measurement of a security's performance in a given universe over time as compared to the performance of all other securities in that universe," according to Invesco.PTF holds 39 stocks with an average market value of $22.7 billion, which is far smaller than what is found on more traditional tech ETFs. The Invesco fund is a growth ETF as over 93% of its holdings are designated as growth stocks and it is a software proxy as that industry represents over 59% of its weight. Global X Internet of Things ETF (SNSR)Expense Ratio: 0.68%Being a thematic fund, the Global X Internet of Things ETF (NASDAQ:SNSR) could be the type of play that investors abandon in rough markets, but that would be the wrong way of approaching this tech ETF. Yes, SNSR is more volatile (standard deviation of 18.5%) than a run-of-the-mill tech ETF like IYW or XLK, but there is also significant growth potential here.Few, if any, of the disruptive technology themes investors have been hearing so much about over the past couple of years have the reach that the Internet of Things has, meaning it touches both businesses and consumers and in significant fashion. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off "On the enterprise side, the IoT will help businesses collect vast amounts of data that can be used in varying capacities, from predicting consumer behavior to reducing supplier risks," according to Global X. "Forecasts expect 20.4 billion connected devices to be online by 2020 with $1.4 trillion in worldwide annual spending on IoT hardware, software and services by 2021." First Trust Nasdaq Technology Dividend ETF (TDIV)Expense Ratio: 0.5%Dividends are meaningful drivers of long-term total returns and stocks in this category, particularly dividend growers, are often less volatile than their non-dividend peers. The First Trust Nasdaq Technology Dividend ETF (NASDAQ:TDIV) proves as much as it has been significantly less volatile than the Nasdaq-100 and broader tech ETFs over the past several years.Owning this tech ETF means capturing exposure to mature tech companies, some with value profiles and some that can be laggards relative to their growth-oriented peers.The upside is the aforementioned reduced volatility, quality balance sheets, dependable dividend growth and a better yield (2.28%) and more upside potential than government bonds.As of this writing, Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post 7 Tech ETFs to Invest In Now appeared first on InvestorPlace.
Dan Deming of KKM Financial shared with the viewers of Bloomberg Markets his options strategy in VanEck Vectors Semiconductor ETF (NYSE: SMH ). He thinks the stock is going to challenge its highs and he ...
They say that markets tend to climb the wall of worries. This is very true these days since we have the NASDAQ Invesco QQQ Trust (QQQ) up 24% year-to-date even in the face of tremendous headline risks from many angles. More specifically, look at the chip sector where a stock like Advanced Micro Devices (NASDAQ:AMD) is up 70% in 2019 despite the ongoing trade war.Source: Sundry Photography / Shutterstock.com This is a slap in the face to all fearmongers scaring investors out of owning great stocks just because the U.S. and China are negotiating a trade deal in a less than ideal setting.These headlines wreak havoc in AMD and the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH) as a whole. While the stock prices go for a ride, their fundamentals remain intact. In fact the demand for AMD products and services has a runway at least a decade long. And as long as they have strong management like they have with current CEO Lisa Su, then there is no reason to sell the stock over short-term fears.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSure, a tweet here or a media headline there could get the traders' attentions, but it's not a reason alone to change the investment thesis for the stock. There is no evidence yet that the US and China won't eventually come to terms. So the prospects for AMD stock remain bullish. AMD Stock Is Still the Top Chip StockIf I own AMD already, then I'm staying long. Otherwise, I treat the dips as opportunities to buy AMD stock for the long term. It has performed most consistently in the sector even last year when markets were correcting hard.Fundamentally, it's not cheap but that doesn't matter. AMD is still a growth company, so when I evaluate those types I don't look for profitability. Instead, I need them to grow a lot. And in order to do that they need to spend a lot. Moreover, AMD stock sells at only 5 times sales. So while the price-to-earnings ratio is scary to some, the stock is not bloated given its growth trajectory.In addition, technically AMD stock is still in the hands of the bulls. The weekly chart shows a clear ascending channel. And as long as the lower edges continue to hold, then the AMD bears will have a hard time taking control of the price action.Short term there are important levels to note. For the last few weeks, AMD stock price range is between $27.50 and $34 per share. The breach of either sides will carry momentum in that direction. Also, since the beginning of August, AMD has been setting higher-lows attacking a neckline at $32 per share. If the bulls can break above it then they could rally another $3 from there. And that would launch the opportunity of the next leg higher.If the general equity markets cooperate, that would fuel the AMD buy programs to exceed $35 per share. But conversely, if the bears are able to bring AMD stock below $29 per share, then they may have the opportunity to trigger a $3 bearish pattern. So clearly the next few weeks are important to recommit to the direction of the next wave in Advanced Micro Devices stock price. The Bottom Line for AMDOf all the chip stocks, AMD is the only one I would bet on these days. It has had the fewest fake-outs. Both stocks of Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC) have disappointed investors several times in recent months. So I consider AMD stock as the best bet on the upside potential of all chip stocks if not the market as a whole.If stocks are higher in the future, then AMD is definitely higher. To that, the bearish consensus is starting to build. The media is pushing the notion that we are in the late stages of the economic expansion. Meaning that a recession is coming. While that is eventually true, there is no evidence yet that a recession is imminent.I just find it hard to believe that we could have the economies shrink when everyone is employed and rates are so low. Admittedly, these are unprecedented times so there are no real experts on what comes next. Therefore I stick with my bullish thesis for as long as the data continues to be in line with expectations as it has been. * 7 Triple Threat Growth Stocks to Buy for the Long Term Companies like AMD are still delivering excellent profit and loss statements with good balance sheets. And the consumer in the US is still spending with extreme vigor, because everyone that wants a job has one. Just like it's not a good idea to buy a stock in anticipation of something without confirmation, it is a mistake to anticipate a rescission without confirmation of its impending arrival.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post AMD Stock Is Still the Chip Champ appeared first on InvestorPlace.
August was tough for the semiconductor industry and semiconductor ETFs. The stocks fell significantly in early August when the US-China trade war escalated.
Despite increasing trade war rhetoric, the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) is maintaining an impressive year-to-date gain of 29% even after a rough August for chip stocks and some market ...
As the U.S.-China trade war rages on, the world’s second-largest economy looks to become less independent on the U.S. by shoring up its own semiconductor industry. Can China become its own semiconductor powerhouse to rival the big U.S. chipmakers? Apparently, this goal is not something new that came as a result of the recent tariff wars with the U.S.