Semiconductor momentum is dangerously overextended
The speakers argued that semiconductor stocks are currently too parabolic to buy, with historically high Relative Strength Index (RSI) levels signaling poor entry points.
The argument
The discussion highlighted that professional investors avoid buying stocks with RSIs above 80, as the odds of getting burned are significantly higher. While the average 63-day return after a momentum thrust is 12%, the current run is at 29%, indicating an unsustainable short-term rally.
The thesis, stress-tested
✓ What validates it
- ✓RSI levels cooling down to historical buying ranges
- ✓A healthy pullback in semiconductor ETFs like SMH
▸ Risks discussed
- ▸Stocks can continue to go higher in the short term despite high RSIs
- ▸Missed upside if momentum persists
Hear it yourself
"But, of course, it went from $6.60 down to $5.20, but it's literally right where it was last quarter before it reported. Yeah. And that's probably the most that's probably the most sleepy one of the group. Do you agree? Meta versus, I don't know. I would probably say Amazon, although it's been more interesting recently. Yeah. I mean, Apple's not gonna say anything exciting. You never know. You never know. A lot of people a lot of people waiting on, a lot of people waiting on the Siri upgrade, the foldable phones. There's some there's some stuff in the ether with with Amber."
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