Public trading strategy
AI trade losing steam as tech selloff spreads — short semiconductor funds to cat
Thesis
A strong U.S. jobs report has traders convinced that the Federal Reserve will keep interest rates high, which usually hurts high-flying tech and AI stocks. We are already seeing massive sell-offs in Asian chipmakers and U.S. futures. Shorting a semiconductor ETF like SMH allows you to profit if this sudden shift out of AI stocks continues, without having to guess exactly which individual chip company will fall the most.
Strategy approach
Build a rule-based strategy that enters short SMH on the daily timeframe when the price closes below the lower Bollinger Band (20-period, 2 standard deviations) and the RSI(14) is below 35. Use a 2% trailing stop to manage risk, and set a maximum holding period of 10 trading days.