Expecting Big Gains From These Chip Stocks

Semiconductors stocks are gaining momentum, here's a few names to trade.

You know about NVDA, AMD, and probably even SMH.

That last ticker is the VanEck Semiconductor ETF and it had quite the year in 2023.

I think there is reason to run higher and I like a few names in particular for potential big gains.

Simply put, if markets continue higher, I like “chips” to lead the way.

That doesn’t mean I expect things to start off with a bang and big push higher.

While NVDA powered the entire sector higher in 2023 (and then seemingly waited for other names in the sector to catch up) we are at extended levels and could see a pause.

You can see the strength closing out the year in the daily candles for SMH.

SMH

SMH daily candles forming a rising wedge.

This rising wedge could give way for a pull back in the near term.

If that happens, look for $160 to hold up as support with help from the 50-day simple moving average (SMA).

That is where I will be stepping in to “buy the dip” if shares do find support.

NVDA

Of course, NVDA will determine quite a bit and it’s recent uptrend is clearly defined.

NVDA daily candles climbing higher.

Shares are pushing the $500 resistance level again and if they can break through I would expect the entire sector to find upside momentum.

That is a big “if” though.

It is more likely that we see yet another rejection at $500 which will allow the entire sector to cool off a bit. This will be what breaks the rising wedge for SMH.

If this drop happens it would be a healthy set up for a strong push higher through the rest of the year.

AMD

Everyone’s second favorite chip name, AMD made strong moves to close out 2023 but also looks ready to give some back.

It very well could power all the way to $160 first, but the wedge is tightening and wedges tend to break down.

AMD in a rising wedge pattern.

If it does see a drop, look for $137.50 as an initial support level. Below that the 50-day SMA shows up near the $127 support level.

While I will continue to watch these juggernauts for leadership and direction, I am also looking at a few other chip names to trade.

I like the set ups for AMAT, MRVL, ON, and RMBS.

All except the last one (RMBS) have excellent options volume and create excellent trading opportunities.

I’ve got two trade ideas now and after the week provides a little more information, I should have two more for you in the semiconductor space!

Let’s get into them.