Chip Stocks Are Overheating, Are They Heading For A Meltdown?

Michael Kramer and Clients of Mott Capital own SWKS, NFLX

S&P 500 (SPY)

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Stocks paused today with the S&P 500 falling 20 basis point to 2,731. It would seem the index is getting ready to break out tomorrow and push on towards 2,800 over the coming days.

Russell 2000

The Russell has a similar setup and appears it is gearing up for a rise too.

Semis (SMH)

Semis where hot again today, and to some degree, I’m beginning to think that the group needs to cool off some or at the very least consolidate. I talked about this morning in the premium area today. Semis May Need To Cool Off

Skyworks (SWKS)

Skyworks was the big winner today rising to resistance around $88. The RSI is overbought, and so a pullback to $81 would be welcomed and would allow the stock the ability to continue to climb without overheating.

Micron (MU)

Micron is now at an inflection point because the stock is at the upper level of resistance at $42. The trend in the RSI is also higher, but again we need to some consolidation in this region between $40 and $42, that would be ideal.

SNAP

Snap surged today after posting better than expected results. I can’t remember the last time that happened. Anyway, the stock traded up to around $8.90 and stopped, not the direction I was expecting. My feeling is that stock refills that gap back to $7.30, but I was wrong once.

Chipotle (CMG)

Chipotle is trading higher after it posted bettered results after a bunch of adjustments. Another one I got wrong. I had looked for a decline, clearly not what is happening.

Netflix (NFLX)

Netflix had an ok day, down slightly, but more important is that it is managing to hold on its recent gains. The trend is still higher at this point, but resistance at $360 is proving to be difficult.

Amazon (AMZN)

Amazon continues to struggle and is hanging on at support around $1,620. The trend in both the stock and RSI is lower, and I still think the stock heads lower.

That is it for today.

Mike

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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.