The semiconductor stocks are rocking…it’s not just about NVDA anymore. Here are a couple that you need to be in. Check Rambus ($RMBS) and Super Micro Computer ($SMCI).
This is Dan Fitzpatrick with FITZ IN FIVE. I want to go over some semiconductors today. Believe it or not, it’s not all about NVIDIA ( NASDAQ: NVDA ) anymore. We will look at NVIDIA ( NASDAQ: NVDA ), and you will find that it may not be all about NVIDIA ( NASDAQ: NVDA ), but it is still pretty much about NVIDIA ( NASDAQ: NVDA ).
I’m starting with the SMH ( NASDAQ: SMH ) here on the weekly chart, the semiconductor index. What this shows us is, that this thing came full circle, from a big pullback in 2022, and then a rally off the bottom, like the market in general. A lot of things did this, but I really, really like this follow-through.
This ran up here, 160.00, basically a double top, so to speak, but then a mild little pullback. The pullback wasn’t on super high volume, not like this. Compare the difference between the volume here, and the volume here. This pullback was healthier, really, and it fell right back to the 40-week or 200-day moving average, roughly. They are calculated a little differently but, essentially, it looks the same.
Then we finally got a breakout, here, at 150.00, this was back in November. Then that took you up to 160.00, and finally, we just really got a convincing breakout a month later, in the middle of December, where everything else kind of melted up as well. So now here we are in January, a month after this.
You see, it bottomed here in late October and then it comes to test this in November, mid-November. Then we finally get the ultimate breakout in mid-December, and here we are in mid-January with a follow-through, and we’ve got higher volume here. This was running lower volume. I had drawn this before when this was trading sideways, and now that it’s moving up, we’re getting higher volume.
This is what I like about it, Cramer might be talking about this on Monday, he asked me for some stock ideas a little while ago and, essentially, I told him what I am telling you right now. But this is what I am getting at here, on this weekly chart, we see a really, really strong convincing continuation. On the daily chart, you see it, but it almost looks like this is ripe for a big pullback. You zoom out and you look at the weekly, and no, I don’t think so.
We’ll look real quickly at NVIDIA ( NASDAQ: NVDA ). I told Charles Payne a few months ago, when for the first time it tested 500.00 on that initial earnings report, and then it fell back. I said, “Look, we could see NVIDIA ( NASDAQ: NVDA ) run up to $1,000.00.”
Because it’s a numerical thing, the stock has to break out above 500.00, convincingly. Because if you are talking about some stupid price target that’s $1,000.00, and this weak sister can’t even get above 500.00, it’s a stupid conversation to have. But technically, I was looking at the way this thing was trading. I’m pretty familiar with the fundamentals too, but this isn’t the nature of this conversation, it has nothing to do with that stuff.
I was looking at this and said, “Yeah, I think $1,000.00 is a good target for this, over time, over several quarters, but it has to break through first.” And so, guess what? It did, right after the first of the year. Here we go, it’s January and the stock breaks out, massive volume, and heavier volume even the next day. Look at how many green skyscrapers there are in a row. There are just not that many selling days. And when there is a selling day, there’s hardly any pullback, just barely a pullback at all.
This stock is absolutely going higher, no question about it, I have never seen a chart that looks like that. When a stock breaks out like this, at some point it will start drifting higher and kind of catch the next base. But this, from here, goes higher.
Now, I put a couple of stocks on the Active Trade List today and Rambus ( NASDAQ: RMBS ) was one of them, another semiconductor stock. This had a really convincing breakout here above 70.00. On heavier than average volume here, I really like the way Rambus ( NASDAQ: RMBS ) is moving. I have a small position in this.
I actually have a pretty big position in NVIDIA ( NASDAQ: NVDA ), relative to my trading account. I like these two a lot, you can look at Rambus ( NASDAQ: RMBS ) and say, all right, this thing is going to go higher. As far as a price target, frankly, I would just be guessing and I don’t like to guess, but $20.00 was the downside here. So I guess we could do a measured move and say, okay, if 70.00 was the breakout, then let’s pick 90.00 as the next potential pause.
Or we could do what Bill O’Neill does and say that when you get a breakout you should start looking to take profits in anticipation of the next sideways move by 20 percent. So for him, that would have been 81.50, let’s just be modest and I’m looking for another 10 percent move in the stock from here. I think that works.
Then the other one I promised I’d cover is SMCI ( NASDAQ: SMCI ). This is up big today, we’ve had this stock on for a while, and so we’ve got a really, really nice trade going on this. I think it goes higher from here.
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