The semiconductor stock index SMH (NYSEARCA:SMH) has been in a downtrend. You’d think semiconductor stocks should have benefited from Intel’s (NASDAQ:INTC) strong pre-announcement. The decline is likely driven by trade war fears.
Tech Stock Focus: SMH ETF Support Level $96
The chart above shows that key action over the last year formed a line of support around $96.
The current downtrend of the SMH ETF looks like the index is headed down to support. Unless we get a settlement of this trade dispute we could still have further downside.
Atlanta Fed GDPNow Estimates Slow
The Atlanta Fed predictions for Q2 had been 4.7%. The just-released expectation is now 3.8%. The drop could be tied to trade war fears. Businesses could start to reassess their plans for the year.
Auto Key Driver For Tech
The longer this now-global trade dispute doesn’t get settled, more companies like GM could pull back.
The auto industry has been a key driver for semiconductor companies as tech content per vehicle has been increasing.
Semiconductor companies also have some of the highest exposures to China of our tech stock coverage. A drawn out fight can hit the SMH ETF.
In speaking to the companies we’d guess nobody’s seeing a slowdown yet. But as business leaders read the news daily someone might blink which could start a domino of slower orders.
Until this trade war sees some resolution we’re concerned that the semiconductor ETF SMH might not see support until $96.
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