Since April, semiconductor inventory has played a crucial role in market dynamics, with the Philadelphia Semiconductor Index (SOX) outperforming the S&P 500 Index (SPX) by over 20%. However, it looks like semiconductor inventory is currently on the rise, which could spell trouble for the market’s leadership. Last week, Broadcom (AVGO) reported revenue that bridged a gap in its stock. Meanwhile, Downmaube is experiencing short-term selling signals, as indicated by demark indicators. This, coupled with declines in both daily stochastic oscillators and MACD indicators, suggests a significant pullback might happen in the next two to four weeks. The initial support level from the 50-day moving average is close to $204, which is about 17% lower than current levels. This revenue-driven selling could lead to a medium-term setback for AVGO, which recently reached an unconfirmed breakout point, pushing resistance closer to $252 since last December’s high. Given these excess conditions, pullbacks might trigger “selling” signals using weekly stochastic oscillators.
From a long-term view, AVGO is on a cyclical uptrend, resilient at support near $197, but its long-term momentum seems to be fading, suggesting it’s entering a trading range with established resistance levels. Similarly, Nvidia (NVDA), a key player in the industry, is experiencing signs of fatigue according to demark indicators, hinting at a possible short-term dip after an impressive revenue report. Its 50-day moving average is also roughly 17% below current pricing. Long-term momentum for NVDA appears to be weakening, and this pullback is shaping up to resemble a bearish head and shoulders pattern.
