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Semiconductor Index at a Crossroads with Test of Uptrend

The price of the SOXX (NYSE:SOXX) semiconductor index is testing the uptrend that has been in place since late-2022. That could have a big bearing on the rally in US stocks with the index tracking all of the large chipmakers, such as Nvidia and Qualcomm. 

SOXX - Daily Chart

SOXX – Daily Chart 

The price of SOXX has fallen from highs near $260 in July and now trades at $216 after breaking the uptrend line. A correction could form if it cannot hold this as a support. 

The semiconductor industry has been the driver of modern tech innovation, and global sales have hit a record $55.3 billion in September, according to the Semiconductor Industry Association (SIA). That is the highest monthly total ever, underscoring the industry’s role in driving advancements from artificial intelligence (AI) to electric vehicles (EVs). 

The AI boom has driven the rally in US stocks as investors looked ahead to continued strong sales in chips, however Nvidia’s latest earnings hint at a slowdown in the growth boom. The AI trend has also struggled to bring big gains for companies outside of data centers and cloud computing storage. 

The next week or two could be important for the overall rally if the current price level fails to find buyers. Global tensions are rising with the Ukraine war and a potential for profit-taking could be a theme. 

Billionaire investor Ken Fisher is still a fan of the AI trend buying up $481.5 million of Nvidia shares and $262.8 million worth of Microsoft in Q3.

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.

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