TSM moves higher, Semi sector toppy but intact
In an NFTRH update on Monday I had expressed a view that the SOX index might have more downside as long as the US market correction persisted, but also that the US market correction was normal and within continuing uptrends and so, no shorting for this non-daytrader. Not unless it’s for strategic hedging or I get proper short setups (again, on a non-day trader’s time frames).
As for the Semiconductor sector, we have been successfully managing and bullishly highlighting it since 2020. Most recently, after initially focusing on the solution to the chip supply problem, the Semi Equipment sector (AMAT, ASML, LRCX, KLAC, etc.) we have been fanning out to the chip makers, and there ain’t no more prominent chip maker than Taiwan Semi Manufacturing (TSM).
TSM (which I hold in my IRA and the model portfolio) reported earnings yesterday and the market obviously liked it. What’s more, although I have not read the release it appears that what bell cow TSM has to say reverberates through the whole Semiconductor sphere.
Anyway, after watching the tantalizing daily chart pattern in TSM for a long time I failed to buy it in time for the initial pop out of consolidation. But as then noted in the NFTRH Trade Log, I chased it a bit on that first day up…
“Doing the unprofessional thing and chasing TSM as the chart I’ve been watching all year finally breaks upward. I woulda shoulda coulda added it last week but didn’t. I’ll leave some room to consider adding more if it clowns me and pulls back again.”
Then a model portfolio position was taken on the downward reaction (flag) and the original position was increased on the pullback. It’s kind of a ‘fundamental view marries patience and perspective’ thing. Bottom line, TSM is now probably a core hold as long as I stay positive on the Semis (which are vulnerable to correction, funda or not, as is any market/sector).
On the biggest picture, the sector is fundamentally bullet proof due to the evolution of the modern world into micro-electronic dependence throughout many industries. The corrections, even bear markets will come and some will be violent.
Graphic source: Semi Industry Assoc.
Semiconductors are everywhere and they’re not going away. They are getting more micro and more industrially pervasive, at least until the time we go full frontal Uni bomber, each living in our own little shack sitting on piles of canned goods, guns and gold.
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