Hey, Ross here:
There’s no question what has been the hottest trade of the past few months – semiconductors.
The momentum has been insane.
But after the past few days, people are asking:
Is the red-hot semiconductor trade collapsing?
Let’s take a look below.
Chart of the Day
This chart shows what usually happens after a momentum trade rallies 20% or more in just three months.
Semiconductors have done 70% in that same timeframe.
And the key takeaway is simple:
Momentum does not last forever.
After the initial surge, the trade often gets much more volatile.
The easy part of the move is over.
The clean trend starts turning choppy.
And traders who pile in late often find themselves buying right as the momentum starts fading.
That’s important because semiconductors have had exactly that kind of monster momentum run.
Now look at this second chart.
It shows flows into SOXL and SOXS.
SOXL is a leveraged bullish semiconductor ETF.
SOXS is a leveraged bearish semiconductor ETF.
In other words…
SOXL is what traders buy when they want to bet aggressively on semis going up.
SOXS is what they buy when they want to bet aggressively on semis going down.
And recently, we saw the second-biggest outflow from SOXL on record…
Along with the biggest inflow into SOXS on record.
That’s a big shift.
It tells us traders are no longer just blindly piling into the semiconductor long trade.
Some are starting to back away.
Others are actively betting against it.
Now, does that mean semiconductors are finished?
Not necessarily.
But it does tell us the character of the trade may be changing.
And when a red-hot momentum trade starts losing steam, there’s one thing you must know how to do.
Insight of the Day
When trading with momentum, know when to hop off the train
Momentum is one of the simplest forces in the market.
A stock goes up…
People notice…
More traders pile in…
And that buying pushes it even higher.
That’s why momentum works.
You don’t need a complicated thesis.
You don’t need to understand every detail of the business.
You just need to see that price is moving and money is flowing.
But that simplicity is also the danger.
Because once everyone can see the same trade…
The edge starts disappearing.
That’s when the move gets crowded…
When volatility picks up.
And when late buyers can get trapped.
So if semiconductor momentum is starting to stall, I don’t want to keep relying on the same easy sector trade.
I want to look for stocks with their own reason to move – stocks with company-specific catalysts.
And the traders who are best positioned to know when those catalysts may be coming…
Are the corporate insiders.
The people closest to the business…
The people making the big decisions…
Who are – thanks to an SEC loophole – are able to legally buy their own company stock.
And that’s why in just a few hours at 11 a.m. Eastern…
I’m going LIVE to show you how to follow these insiders so you can profit from these company-specific catalysts like they do.
There’s a reason my insider strategy has never had a losing year…
And could have had you sitting on open gains as high as 1,305% right now.
After my insider walkthrough today, you’ll know:
- Where to find the complete record of these insider trades…
- The warning signs you must know before following the insiders…
- And the 3 most powerful – yet counterintuitive – insider “conviction” signals I look for before making a move.
Attendance is free, but spots are limited and we expect a very packed room.
So click here to lock in your free seat if you haven’t yet…
And I’ll see you in just a bit at 11 a.m. ET.
P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.
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Editor, Stock Surge Daily
