No one is going to blow up Taiwan Semiconductor

Additional tension between China, the United States and the importance of Taiwan Semiconductor Manufacturing Company may signal the end, at least when it comes to the plunge in stock prices of affected or related semiconductor companies.

Today’s news is as close to a crescendo of threats as may be possible, without the next step being actual action.

This heightened angst may signal we are nearing the end of the tough talk but it’s a reminder that he deeper reason for many stoushes involving the United States are about trade and economics.

Will China actually take over TSMC?

This post I wrote in February 2022 put TSMC’s importance in perspective.

This post also written in February 2022 posed a put option trade idea should things become a little more ‘hairy’.

Since late February, shares in TSMC have fallen 50% and those options have risen 4-fold.

Was Pelosi’s visit to Taiwan worth it?

Since Nancy Pelosi arrival on Taiwan soil on August 2nd, 2022, the SOX Index has fallen 27%. 

Good one Nance ! 

All of that in 2 months but I think hubby, Paul’s call option buying of Nvidia in the days prior to you announcing the trip to Taiwan haven’t worked out either (presuming he’s still holding them) as that stock has tanked 39% since your visit.

Is Biden’s decision on Friday October 7th, 2022 to ban semiconductor (and equipment) exports to China wise?

Since then (in 3 trading sessions) the shares in LAM Research, Applied Materials, Intel, AMD, Nvidia, KLA Corp, ASML and TSM have fallen 19%, 14%, 8%, 15%, 12%, 15%, 13% and 15% respectively.

Biden is still help bent on his pre-mid term election strategy of being tough on China and invoking massive domestic spending (the opposite to Obama, whom Biden blames for their mid-term mauling in 2014) but he causing higher inflation by ‘de-globalising’ relations which have traditionally assisted the United States and various nationalism and protectionist measures are adding to global tensions.

I don’t think Biden realises the job losses and investment losses he is about to cause with these export bans, let alone the investment losses being caused. 

For some perspective, notwithstanding overvaluations and possible slowing product demand, since is price peak in November 2021, Nvidia has seen its shares fall 65% and its market capitalisation has declined by $554 billion.

That is the same amount of money if you wiped out the entire market capitalisation of Australia’s largest 4 banks, BHP, Rio Tinto, Wesfarmers and Woolworths or 50% of the total market capitalisation of companies listed on the Australian Stock Exchange (ASX).

October 12, 2022

by Rob Zdravevski

Semi’s are closer to the end of the move

Many are watching the great semiconductor shake-out.

The warnings of fervour and a peak where evident 15 months ago.

Speculators were playing in rarefied air when the SOX Index was flying between 3,400 and 4,000.

Today, it’s trading at 2,275.

Nvidia is one but not the only proxy for calling an end of the decline.

Seeing NVDA shares trade at $105-$108 may be a point to heighten my awareness to some form of exacerbation or trough in share prices of various semiconductor stocks.

October 11, 2022

by Rob Zdravevski

Awaiting a SOX buying moment

The SOX index has traded down to 2.5 standard deviations below its rolling weekly mean and registered
an Oversold weekly reading on 3 occasions in the past 15 years.

I’m awaiting a 4th occurrence

October 7, 2022

by Rob Zdravevski

Semiconductors – It’s a bit of a big deal

This week, the Philadelphia Semiconductor Index (SOX) mean reverted to its 200 week moving average for only the 4th time in the past 10 years.

I’ll re-iterate that a 200 week moving average is notable. It’s a 4 year rolling mean.

Extra work is required to determining where this downtrend ends, which has seen this index nearly halve in only 9 months.

However, if you think semiconductors are no longer relevant and the theme has no longevity, then this wouldn’t be of interest.

September 24, 2022

by Rob Zdravevski

Another FANNGM is doing it

The Nvidia (NVDA:US) mean reversion is almost done.

It doesn’t necessarily mean that its 200 week moving average is the place to buy, as it may overshoot to the $103-$115 mark…..

this chart did tell you that it was dangerous chasing and buying this stock at stretched valuations as it soared way above its 200 WMA.

September 14, 2022

by Rob Zdravevski

Shorting the SOX to hedge index risk?

Continuing the series on identifying extremes, the attached “Weekly” chart show the price of Nasdaq Semiconductor Index (SOX) for the past 12 years.

My annotations highlight various times when the index is trading at ‘extreme’ percentage above its 200 day moving average.

If I don’t bang on about mean reversion, at least it shows that the probability of the index extending its move is limited.

This also makes the SOX a plausible security to short (much like the FAANGM stocks) if one is looking to hedge out index (excesses) risk.

October 28, 2020
by Rob Zdravevski

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