The Rock Trading Group
CMT, Technical/Situational Analysis, Options Trading
The recent one-day drops of 7.01% in semiconductors and 14.18% in the DRAM ETF are a favorable buying opportunity, because single-day falls of 6% or more are characteristic of bull markets, not peaks. Since 2011, forward returns one, three and six months after such drops have been positive more than 88% of the time, with one-month gains typically exceeding the initial loss. x.comÂ
Semiconductors look attractive because SMH's largest volume since July is appearing as it defends last month's and last week's lows. This area is the concentrated spot for the ETF's largest institutional investment ever. x.comÂ
Memory stocks are very cheap on P/E ratios even if the rate of their earnings growth has peaked. Big earnings growth still lies ahead, and big cash flow makes big buybacks likely, supporting significant new highs after this correction. SMH is in corrective mode before moving higher toward the raised $850 target, up from $800. x.com x.com x.com x.comÂ
Semiconductor stocks have a plausible case to fall at least another 10% or so, as the pain expected before the midterms arrived earlier than most anticipated, in July. Chips are king, so their weakness drives the market. Tech should still come back with a vengeance and make this an easy buy again, as it did after COVID, DeepSeek, Liberation Day and the Iran war. x.comÂ
The VanEck Semiconductor ETF could keep outperforming NVIDIA from here, given how large NVIDIA has become. x.comÂ
Semiconductor stocks have formed a base, with the bullish ribbon on the daily chart continuing to widen alongside steady whale accumulation, now at 70.2%. x.comÂ
Post-midterm seasonality and hedge funds' flip from long to short make this reset the next great opportunity to build for a bull market driven by the Innovation Revolution. Since 1950, the S&P 500 has gained 29.9% on average over the next 15 months in all 19 comparable years. This selloff looks pre-war driven; military action looks nearly certain and may be the most anticipated and discounted ever. A 90-day, 32% Nasdaq bear market preceded the dot-com era's final 18-month melt-up. x.com x.comÂ
The S&P 500's post-midterm record makes 2027 pullbacks worth buying, though history does not guarantee another gain. It rose in the year after all 19 US midterm elections since 1950, averaging 15.4% over 12 months, 12.4% in six months and 5.7% in three months. Take advantage of market swings by buying pullbacks. x.com x.comÂ
Semiconductors look attractive over a two-to-three-year horizon because the short-term pullback has already happened. Nvidia's impact should reverse the trend. x.comÂ
The VanEck Semiconductor ETF is likely to keep recovering because it holds larger semiconductor and semi-equipment names that are staging a comeback. Memory-concentrated funds still have a lot of work to do. x.comÂ
The Roundhill Memory ETF looks attractive because its largest daily buy volume in nearly two months extends the earlier accumulation sequence. Sellers may still have momentum; the bull case would be a large lower wick holding $60 into year-end. Calls to bet on it are extremely cheap. x.comÂ
