Chip stocks crumble as global AI panic spreads — short the semiconductor slide
Thesis
The chip sector is leading the market lower as investors wake up to the fact that AI stock prices got ahead of reality. With Asian tech markets also selling off heavily, this looks like the start of a broader cooling period rather than just a one-day blip. When momentum shifts this hard out of the market's hottest sector, the selling pressure often continues as investors rush to lock in gains. Betting against semiconductor stocks as they break key support levels offers a way to profit from this shift.
Strategy approach
Build a trend-following strategy that enters short SOXX (Semiconductor ETF) on the daily timeframe when price closes below the 50-day simple moving average and the 14-day RSI is below 40. Exit if price closes above the 20-day simple moving average or after a 15-day max hold.