Chip stocks bounce on a scary market day — the bottom might be in
Thesis
Chip stocks like AMD and Nvidia just had their biggest bounce in weeks after a brutal selloff wiped roughly $1 trillion off Nvidia's value alone. The fact that this rebound happened on the same day the broader market fell due to escalating Iran conflict and surging oil prices is especially telling — it suggests dip-buyers are stepping in aggressively despite the negative macro backdrop. When a sector goes up on bad market days, it usually means the selling pressure has been exhausted. Nvidia's valuation hitting a multiyear low while revenue keeps setting records further supports the idea that the selloff went too far, too fast.
Strategy approach
Build a rule-based strategy that enters long SMH (VanEck Semiconductor ETF) on D1 when the ETF closes up >3% from the prior day after a 15%+ drawdown over the prior 20 trading days. Exit on a 2% trailing stop loss from the entry close, or after a 21-day max hold. Additionally, scale out 50% of the position if the ETF gains 8% from entry.