Semiconductor stocks may plunge due to the trade warEver since the march dump, the SPY has recovered while the semiconductor stocks have made significant gains. Some of them are also approaching all time highs.
The US ban on TSMC manufacturing for Huawei will be a major problem.
TSMC is the leading manufacturing for the most advanced chips and if china does not get access to it, it will cause a domino effect.
Huawei supplies a variety of electronics to large companies and countries including next generation 5G base stations.
China is also the largest market for chips ( sold by the biggest US companies). Now if china retaliates with restrictions imposed on US companies to sell semiconductors in china it will have a massive impact.
The race for 5G supremacy & Space dominance will cause more of these tit-for-tat moves from either side.
Technicals:
Weekly RSI coming out of oversold regions.
Large volumes being traded indicating high interest among traders.
MACD in bearish territory still but looks like it is trending towards bullish. Will have to watch these indicators closely.
This is a short term trade.
Note:
This is not financial advise. Please do your own research.
