Chinese bear hug
A bear market with Chinese characteristics.
Sun Bear: Taronga Zoo
The bearish outlook for China's economy is impacting stocks, precious metals, crude oil, and base metals. Semiconductors are also on the sell list.
Semiconductors
Not just base metals are affected by shrinking Chinese demand; semiconductors are also falling. The chart below shows a declining Dow Jones Industrial Metals Index ($BIM) [silver], accompanied by a weakening South Korean Electric & Electronics Index (KS41) [blue] and falling market leaders in the semiconductor industry: Nvidia (NVDA), Taiwan Semiconductor (TSM), and Dutch photo-lithography specialist ASML Holdings (ASM). All three (NVDA, TSM and ASM) fell steeply during the week.
Broader technology stocks are also affected, with the Nasdaq QQQ ETF testing support at 475. Breach of support is likely and would offer a short-term target of 450.
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Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.