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Chart Advisor: One Chart to Rule’m All

Chart Advisor: One Chart to Rule’m All

Posted November 14, 2024 at 10:55 am

Investopedia

By Tom Bruni, CMT

1/ One Chart to Rule’m All

2/ AMD Doesn’t Look Great

Investopedia is partnering with CMT Association on this newsletter.  The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.

1/

One Chart to Rule’m All

We’re going to keep things simple in this issue, focusing on what’s arguably the most important sector chart in the world.

Below is a chart of the iShares Semiconductor ETF ($SOXX), which had been a major leader in the market throughout 2023 and into mid-2024, but has faded in strength recently. 


The chart shows prices sitting below their 200-day moving average and trendline from its October 2022 lows. On top of that, momentum recently failed to reach overbought territory since July, showing a lack of commitment from buyers. If prices were to break below their uptrend line, that could signal a clear trend break and confirm the first “lower high” of a potential downtrend.

This sector is particularly in focus because its largest holding (and world’s largest company), Nvidia ($NVDA), is reporting earnings next Wednesday after the bell. Shares are sitting at all-time highs, but expectations for its results have never been higher, given shares have rallied over 1200% in two years.


The company’s results and subsequent stock reaction will set the tone for a semiconductor sector that clearly needs a catalyst to keep its long-term upward momentum going. If you want in on the action, we’re hosting an “Nvidia Day” event on Stocktwits that culminates with our community listening to the conference call live on Stocktwits. 

2/

AMD Doesn’t Look Great

Since we’re talking about waning momentum in the semiconductor sector, we should talk about Advanced Micro Devices ($AMD), which recently announced a 4% workforce cut as it “right sizes” headcount to focus on its core priorities.


The stock hit new all-time highs in March and has been trending sideways in a wide range ever since. With momentum showing mixed signals and prices sitting comfortably below a downward-sloping 200-day moving average, this is a sideways trend at best…and a downtrend at worst. As the third largest weighting in the $SOXX semiconductor ETF, traders and investors are watching this closely to see how it develops.


Originally posted 14th November 2024

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