Glimmer: noun; a faint sign of a feeling or quality, especially a desirable one
The Semi sector as a whole remains in a growth contraction. I happen to hold equipment makers ASML and AMAT and have a couple of chip makers on watch (as noted in NFTRH’s NFTRH+ Charts & Notes segment). Semi is the early bird, the canary and despite the industry contraction the Semi index has not given up the leadership end of the SOX>NDX>SPX chain.
Hence we have an unbroken cyclical signal here. People may call it bullshit, the PPT directing things, Algos goosing the market or whatever else. But the Semi sector provided the early signals in January-April 2013 from which an economic recovery eventually hatched. So it is notable that the chain is not broken despite the trade war, fading economic signals elsewhere and even the Semi sector’s own internal analysis. Ref…
From the first article comes the “glimmer” amid the negative data…
Taiwan wafer foundry sales are often a leading indicator for world semiconductor shipments. They turned up this summer (Chart 6). On a 3/12 basis chip foundry shipments are now pointing to future recovery for semiconductors and SEMI equipment (Chart 7).
In 2013 positive signals coming out of the Semi sector spelled doom for whatever gold bugs had not yet gotten the memo. It was also a global deflationary backdrop that promoted Goldilocks in the consumption-addicted US and kept the world shipping to our shores.
Today the dynamics are different as an overt trade war puts traditional economic signals in a blender and makes a mess out of them. So the best course is an open-minded one that tracks weekly events and current trends, holding or revising narratives as required.
Right now, the narrative above is that for some reason Semi leadership is not broken even though the public is freaking out about this thing called the yield curve inversion (“I don’t know what that is, but it sure does sound scary!”… thinks the public), the trade war and a softening economy and other economic signals are easing.
I plan to respect Semi and the still up trending charts of ASML and AMAT, until given reason not to.
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