Semiconductor stocks haven't been doing well in recent months. Generally speaking, a bear market in U.S. equities and a particularly vicious bear market in growth stocks and technology stocks have dealt a devastating blow to this sector.
Recent events have made matters worse, as a result of an incoming downturn. In fact, some claim that the country was already in a recession.
I value semiconductors as a source of truth about the global economy. Almost every industry from automotive to healthcare to industrials uses semiconductors. As goes the economy, so goes this group.
The VanEck Semiconductor ETF (SMH) - Get VanEck Vectors Semiconductor ETF Reporthas not performed well. The ETF made new 52-week lows this morning, down 40% from its high.
NVIDIA Corporation ReportAlthough it fell to fresh 52-week lows on Tuesday, it has fallen even further from its 52-week lows, with a loss of nearly 60%.
Let's take a look at the chart to see what's going on with these names.
Nvidia Stock is being traded.
Nvidia's weekly chart.
TrendSpider.com has provided a chart for this article.
Nvidia stock has not performed as well this year, although it is a company leader. The stock was recently traded in a key area near $150, which had previously faced resistance for over a year.
The stock is having its first real retest of this zone since it began more than a year ago, and the bulls are hoping it will serve as a support.
Advanced Micro Devices (AMD) is in for a similar hope, although the stock is leaning heavily on previous support rather than retesting previous resistance. Both stocks tend to trade in tandem, so the bulls are looking for both to make a bid shortly.
AMD and Nvidia have reclaimed their previous week low, thus far on Tuesday, which is the $143.92 level. More experienced traders may be long with a stop-loss just below this week's low.
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A jump in the price might put $160 in play, followed by active resistance via the declining 10-week moving average.
The $110 to $130 price range might be in play if Nvidia fails to bounce back and trades back below its previous week low and continues to erode.
The following measures (in order) are found: the 161.8% downside increase from the previous range, the 200-week moving average near $120, the 2021 low near $115, and the 74.8 percent retracement near $110.
The monthly VWAP score below all of these levels is approaching $100.
Nvidia's stock is unfortunately in a downtrend. Fortunately, the levels are clearly outlined.
Semiconductor Stocks are being traded.
The SMH ETF's Weekly Chart
TrendSpider.com provides this chart as a service.
The SMH ETF chart has an interesting appearance. The $220 level was a clear target of interest. It failed several weeks ago, but the bears have remained in control ever since. A declining 21-week moving average was active resistance in that stretch.
With today's action, the ETF fell below the monthly VWAP score and is struggling to return to this level.
If it can regain it, we may see a return to $200. Above $200 and the $220 level might be in play, along with the declining 10-week moving average.
The bulls must beware of a possible move into the $180 area on the downside. Here the SMH ETF finds the rising 200-week moving average and the key 61.8% retracement. At the very least, I would anticipate some sort of bounce from this area.
If not, the mid-$150s might be in play.