Semiconductor Stocks Plummeting: Is the Market Next?

Summary

Is the dramatic fall in semiconductor stocks a warning sign for the entire market? This discussion dives deep into the recent, 'not orderly' market action, especially the painful drawdowns in semiconductors and memory stocks, with the SOX index falling below its 50-day moving average. The experts believe there's more downside and volatility to come in this sector. They highlight historical chart patterns, like the doji star in DRAM and engulfing patterns in Micron, suggesting a potential for further decline, with a significant gap on Micron's chart pointing to a possible 50% drop from current levels. The conversation then links this volatility to the South Korean KOSPI index, noting its tight correlation with semiconductors due to the large presence of Korean companies in the DRAM ETF. Looking at broader earnings, the S&P 500 is showing nearly 24% growth, with the 'Mag 7' companies contributing significantly, though the other 493 companies are also performing well with 21.5% growth. This is seen as a positive sign compared to periods of greater divergence. However, the market may be on 'peak earnings watch' if semiconductors have already topped. Despite one inflation reading coming in cooler than expected, persistent PPI being higher than CPI suggests ongoing margin pressure for companies and a continued threat of inflation. This episode features insightful analysis from Elizabeth Thomas, Guy Adami, and Dan Nathan, making the full video a must-watch for understanding these market dynamics.