Semiconductors Snap Back Ahead of Key Earnings Reports

 | Jul 25, 2022 14:47

  • Micron offered bleak view of semiconductor industry in late June
  • But two major global players provided upbeat results in early July
  • More chipmakers report quarterly profit numbers this week

    • Amid a season of negative guidance numbers and concerning tech outlooks, two standouts thus far are Samsung Electronics (KS:005930) and Taiwan Semiconductor (NYSE:TSM).

    Earlier this month, Samsung’s many chips. Late last month, industry heavyweight Micron Technology (NASDAQ:MU) said it would cut production as demand may turn south soon.

    The popular way to play the space is through the VanEck Semiconductor ETF (NASDAQ:SMH). The fund holds 25 of the world’s largest semiconductor stocks, with Taiwan Semi and NVIDIA making up nearly 20% of the portfolio. SMH is a mega-cap ETF with a weighted average market cap of $152 billion, according to VanEck. It’s also relatively volatile with a 3-year beta of 1.09 vs. the S&P 500.

    There are a handful of ETFs I review when trying to get a sense of where the broad market is headed. Transports (IYT), regional banks (KRE), homebuilders (XHB), and semis are the four horsemen in my technical eye.

    All these charts have significant repair work to do in order to establish new uptrends. With SMH, there’s been an impressive bounce off the June low, but it is simply back at trendline resistance. Its 200-day moving average is also negatively sloped, indicating an established downtrend.

    SMH ETF 3-Year Chart: Downtrend in Place with Falling 200 DMA/h2