AI semiconductor cracks threaten the broader market
The thesis argues that technical breakdowns and negative headlines in key semiconductor stocks pose a downside risk to the broader S&P 500.
The argument
The host highlighted that the semiconductor ETF (SMH) has broken below its 50-day moving average following weak headlines from companies like Oracle and Broadcom. Given the massive market capitalization of these AI-related names, further weakness could drag down the entire index.
The thesis, stress-tested
✓ What validates it
- ✓The SMH semiconductor index breaking below 340
- ✓The S&P 500 rolling over through the 6,700 level
▸ Risks discussed
- ▸AI stocks could quickly find support and resume their upward trend, rendering hedges costly
Hear it yourself
"If the SMH semiconductor index starts breaking below 340 and the S and P 500 rolls over through the 6,700 level at the same time, that opens a door for much more volatile environment and would have me firmly on guard for downside risk."
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