When we look back and discuss the bull market that began in 2023, what will we say?
I think we will talk about the artificial intelligence revolution and all the technology stocks that benefited most from it.
Maybe we will say this is when Nvidia changed the world and paved the way for so many new innovations and efficiencies.
I think there’s a good chance we’ll be talking about some other companies we haven't even heard of yet.
I don’t know how this story will end, but I do know it will be all about AI.
That should be clear to everyone by now.
And while I may not be the most tech savvy guy, I know the rise of AI has everything to do with advanced computer chips made by Nvidia and others.
As they say, you can’t have a party without the chips.
And the chips have really fueled the current bull market party. SMH rallied more than 3x in about a year and a half, kicking off the new bull market.
It is still one of the top-performing industry groups this cycle, despite going sideways for the last six months.
Here it is on a relative basis, showing zero progress versus the broader market since February!
So, with everyone souring on semis due to their lackluster performance this year, I propose the following:
We can make one of two bets right now.
We can bet that semiconductors - the early cycle leaders, and bull market darlings, will complete this head and shoulders top and become laggards…
And that this happens just as the bull market appears to be gaining steam and enjoying the broadest level of participation yet.
Context matters, so read that sentence again if you need to.
OR.
We can make the bet that this is yet another failed top. That same old pattern we keep seeing.
And that semiconductors dig in here, stage a rebound rally, and catch some of those rotational tailwinds. Maybe they even reassert some of that old leadership.
And after going sideways since July, the technology sector finally breaks out. And it does so with the support of the most important industry group in the world.
And then all is good in the bull market again. And our leaders are back.
And NVDA is at new highs. And maybe SMCI didn’t fake their financials after all. And maybe INTC can find a decent CEO. And Taiwan Semi is safe from China.
Maybe, that’s all a bit much, but you get the point.
My team and I are making the bet that semis bounce back in a big way here.
And we’re putting our money where our mouth is. We just put a new semiconductor long on via our Breakout Multiplier system.
The stock just broke out from a dot-com bubble base and is in the process of failing a multi-year top. This one just looks different from its chipmaker peers right now.
You can get this trade and all the others at a steep discount this week.
