To The Moon

We are seeing semiconductors name like $NVIDIA(NVDA)$ and $SUPER MICRO COMPUTER INC(SMCI)$ trading near their previous lows when we experienced sharp selloff. The last event was during the August and September 2024 period, which we saw a recovery small rally after these sharp selloff.

So this current low price target of these two semiconductor stocks might tempt investors to buy the dip, but I think we need to be aware of more pain as AI revolution would be paused due to tariff concerns as corporations might reduce their budget spending.

VIX At Dangerous Level (> 30)

We are seeing the VIX above the 30 level, when the VIX (Volatility Index) rises above 30, it generally indicates a period of heightened market volatility and increased investor fear.

We are seeing increased market volatility when VIX above 30 suggests that traders expect significant price swings in the S&P 500. This means that stock prices could fluctuate dramatically in either direction.  

There is also heightened investor fear and uncertainty as the VIX is often referred to as the "fear index," and a reading above 30 reflects a sense of unease among investors. This fear can be driven by various factors, such as economic uncertainty, geopolitical events, or unexpected news.  

Nvidia and SMCI Stock In Major Downtrends

After we saw Nvidia and SMCI getting very significant gains over the past few years, but we can see that they are now in major downtrends.

Nvidia Trade Is Forming Similar Patterns Like The Previous Downturn

If we looked at how NVDA have been trading recently, we can see that it is forming similar pattern like the previous downturn we experience in 2024, RSI is showing a downside trending towards the oversold region, and it is near the lows of 90 we saw in August 2024.

So I have plot two levels which I would be following NVDA if go below 100, with RSI in the oversold region, then this downside would be continuing into stronger, pushing NVDA to possible 90.

If NVDA can hold the 102 level as we continue to monitor how the tariffs episode develop, the major deadline is 09 April, so any urgency for negotiation for tariffs reversal would need to follow closely.

The market uncertainty is adding to pain already facing chipmakers, with Nvidia stock down more than 23% year to date and hitting its lowest levels in seven months.

SMCI Losing The Support Poised For More Downside

If we looked at how SMCI is trying to hold up the downturn but it does not seem to work for them, the important level that we could be watching for SMCI is around 26.50.

This is one of the lows in February 2025, so this might not be the time to buy SMCI, as I am expecting more downside for SMCI as spending on AI revolution is expected to be cut hence it could cause soe volatility on SMCI price as well as the entire semiconductor sector.

Tariffs imposed by the Trump Administration on chip producing hubs like Taiwan and South Korea are beginning to get people to worry as semiconductor companies look at the tariffs impact on demand and manufacturing.

Though the semiconductors are not involved in the immediate reciprocal tariffs, but we need to understand that manufactured products that contain chips would be subjected to higher rates as well.

SMCI stock, while still up 5% year-to-date, is trading more than 70% below its all-time highs from last year same period.

What To Watch Out To Buy Nvidia and SMCI

I would think that we need to wait for Nvidia to show signs of confirmed uptrend when it start to move above the defensive weekly 26-EMA, but RSI need to show signs of going above 50 towards the overbought region.

If we looked at how NVDA managed to gather strength for upside, it would need to clear the 12-EMA, so this might take some time before the market digest the impact from tariffs.

If we looked at SMCI, it could be in for a prolonger decline and current sideways trading, this is due to their leadership in the semiconductor industry reducing, so if we looked at the technicals, looks like SMCI might take a longer period to move above the key moving average level for confirmed uptrend.

I think SMCI need to really stay above the weekly 50-EMA level, so we might be seeing SMCI navigating more downside if the final products containing their components would be hit with higher rates, that might cause SMCI to go down further.

Summary

We need to continue monitoring the market as it remain bearish, with a pervasive risk-off mood which has crossed the trading over tariff uncertainty.

I think traders and investors need to examine this big question whether the tariffs are a permanent part of trade with the U.S. or a negotiating tactic and if carve-outs or reversals are possible.

Until now, we are not seeing any exemption for products and finished goods that contain semiconductors like appliances and electronics, this could cause a huge issue for companies with products that rely on chips.

One other thing we need to understand is protectionist policies from the U.S might trigger retaliatory measures from other countries, this obviously would lead to more fears in the market of a larger trade war.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia and SMCI could be getting uptrend if we saw a reversal of the tariffs soon.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.