• Howie Town
  • Posts
  • Momentum Monday - The AI Craze Lifts Semiconductor Stocks To More Highs

Momentum Monday - The AI Craze Lifts Semiconductor Stocks To More Highs

The S&P and Nasdaq 100 Close At All-Time Highs

Author

Howard Lindzon
January 22, 2024

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Good morning everyone.

Before we get started with the weekly Momentum Monday show, I wanted to share two charts. The first is that of the Semiconductors hitting a new all-time high relative to the S&P (thanks JC).

The second chart, also from JC, is the relative strength of Etherum over Bitcoin.

Onward…

You can watch this weeks episode of Momentum Monday and last weeks episode of Trends with Friends on my YouTube channel. It is easy to subscribe and if you do so, every Sunday you will get an alert when the show get posted.

Chapters:

  • Week in review (0:00)

  • Earnings season (1:30)

  • Quantum beneficiaries (5:27)

Here are Ivanhoff’s thoughts:

SPY and QQQ closed at all-time highs but we are in a stock picker’s market, not a wave that lifts all boats. The tape has been rather choppy with many fades and frequent changes of direction – not easy to navigate. 

There was a quick rug-pull on Wednesday (Jan 17th) – most stocks gapped down. A large number of tech stocks and ETFs tested their year-to-date volume-weighted-average price on that day and found support there – QQQ, FNGU, SOXL, META, AMZN. The real leaders like NVDA and AMD didn’t even blink during that pullback for the indexes. 

Then, on Thursday (Jan 18th), Taiwan Semiconductors (TSM) crushed earnings estimates and confirmed that the recession in semiconductors is over, mostly due to an enormous demand for AI-related chips. All semiconductors stocks gapped up lifting most of the tech sector with them. On Friday (Jan 19th), Super Micro Computer (SMCI) beat estimates and raised guidance, staging an acceleration in anything AI-related. 

The bulk of earnings season is still ahead. So far, we can say that AI remains the major theme in the market and the main source of growth. This is why stocks like AMD, NVDA, INTC, and many others are rising in anticipation of their earnings reports.

Small caps ETF, IWM tested its 200-week MA where it found support. It’s all about interest rates here. IWM has been almost perfectly negatively correlated to the 10-year yield in the past six months. If rates resume lower, small caps are likely to quickly catch up with large caps.

Featured Charts:

Have a great week.

Join the conversation

or to participate.