The Market Update: Semiconductor Sector Drags Down Indices

Yesterday, the market experienced a 1.5% decline, primarily driven by the semiconductor sector. The plummeted by over 5%, breaking below its uptrend. This could indicate a potential lower move from current levels. Let’s dive deeper into the analysis:

Technical Analysis:

  • The index broke below its uptrend, forming a rising wedge or a bump-and-run pattern.
  • The RSP () and are also showing a rising wedge pattern, suggesting a possible end to the upward momentum.

The main contributor to this decline was ASML (AS:), which saw a significant 16% drop due to weaker-than-expected bookings for the third quarter and a soft outlook for 2025. This resulted in ASML (NASDAQ:) erasing all its gains for the year, now down by around 2%.

The SMH ETF was heavily impacted by ASML’s drop, leading to a nearly 6% decline. The big question now is what happens next:

Potential Scenarios:

  • If yesterday’s attempt to break out above the triangle pattern was a false breakout, the SMH could see further declines.
  • Next support zone for SMH could be in the low $230s.

Chinese Stocks Unimpressed by Stimulus

Despite China’s efforts to stimulate the market, Hong Kong is expected to open lower again, with down by more than 1% yesterday. The market seems unimpressed by China’s “Bazooka” stimulus.

Various Chinese authorities are scheduled to hold a briefing on Thursday, aiming to boost market sentiment. However, if this meeting fails to impress, a break below the 20,000 level on futures could lead to further downside towards the 18,000 range.

Copper prices are also under pressure, with a critical support level at $4.29. A breach below this level could push copper down to $4.10.

Overall, the market sentiment remains cautious as investors await further developments in the semiconductor sector and Chinese stimulus efforts.


Analysis:

In this comprehensive market update, we observed a significant decline driven by the semiconductor sector, particularly ASML’s disappointing performance. This sheds light on the importance of monitoring key players in the tech industry and their impact on broader indices.

Furthermore, the technical analysis provided insights into potential patterns and support levels, guiding investors on possible future market movements. Understanding these patterns can help investors make informed decisions and navigate market uncertainties.

The lackluster response to China’s stimulus highlights the importance of global economic factors on market sentiment. Investors should pay close attention to international developments and their implications on various asset classes.

Overall, staying informed and analyzing market trends is crucial for investors to protect and grow their portfolios. By leveraging technical analysis and monitoring key economic indicators, investors can make strategic investment decisions that align with their financial goals and risk tolerance.

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