Buy Alert! Trade Talks to Fuel Chip Stocks

RoboStreet – September 19, 2019 

Trading for Profits from the Trade Talks 

Yesterday, mid-level trade negotiations resumed in Washington D.C. following President Trump’s decision to delay a tariff increase set for October 1 on $250 billion of Chinese imports. China also delayed tariffs on additional U.S. goods as a gesture to move toward what will likely be an interim trade deal. Most trade experts are maintaining a low level of expectations given how great the divide is of what the U.S. Trade Representative (USTR) team is demanding versus what China will agree to.

The OECD lower its global growth outlook from 2.9% to 2.4%

Both sides continue to hold great differences in trade policy as new terms will have long-term implications on international trade. This week’s talks are meant to lay the groundwork for high-level talks in early October and determine whether a breakthrough in the two-year stalemate can be realized. The OECD lowered its global growth outlook yesterday from 2.9% to 2.4%, citing the trade war and Brexit concerns.

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Source: Getty Images

Huge doubts remain in U.S.-China agreement

While there is a strong likelihood of both sides will make good progress in advancing trade on farm commodities, there remains huge doubts about China agreeing to changes regarding IP theft and forced technology transfer of U.S. companies in which to gain access to their markets. Other major issues include addressing the massive number of cyber attacks on U.S. enterprises and government assets, currency manipulation, dumping of commodities and importing fentanyl through illegal means.

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China can hardly stand by and do nothing

It’s very difficult to speculate what might come of the first round of talks, but if there is no genuine intent on the part of China to curtail their aggressive actions against U.S. assets, then there will be no talks in October and a resumption in applying new and higher tariffs will occur. But to this point, China can hardly stand by and do nothing as their economy is showing further signs of weakening.

China’s industrial production at the weakest growth in 17 years

This past week, it was reported that China’s industrial production increased by just 4.4% in August and the weakest growth in 17 years. The figure also came in well below the 5.2% forecast. Retail sales of 7.5% for August are also trending lower, indicating there is a further downside risk.

Mathematics if initial talks are successful

Assuming the talks this week conclude with enough on the table to move on to high-level talks in October, the market will be looking to rally those stocks that would be the so-called beneficiaries.

The semiconductor equipment companies are far outperforming the chip makers

Of late, the semiconductor sector has performed best among all tech sub-sectors. Specifically, the semiconductor equipment companies are far outperforming the chip makers. Shares of Lam Research (LRCX), ASML Holding N.V. (ASML) and KLA Corp. (KLAC) have soared to new all-time highs, with Applied Materials (AMAT) also challenging its lifetime high.

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Chip equipment stocks worth to pay attention

Chip equipment stocks typically lead the chip producer stocks, so this fantastic rally in the chip equipment stocks sets up the stocks like Intel (INTC), Advanced Micro Devices (AMD), Micron Technology (MU), Analog Devices (ADI), Microchip Technology (MCHP, Maxim Integrated Products (MXIM), Texas Instruments (TXN), Nvidia Inc. (NVDA), Broadcom (AVGO), ST Microelectronics (STM), NXP Semiconductors N.V. (NXPI), Marvel Technologies (MRVL), Skyworks Solutions (SWKS), Qualcomm (QCOM), Xilinx (XLNX), Lattice Semiconductor (LSCC) and Cirrus Logic (CRUS).

Tradespoon Seasonal Chart pointing to “higher” prices

My level of confidence in the potential of a broad move for the chip makers is validated by an across the board bullish reading from my Tradespoon Seasonal Chart where all four probability readings are pointing to “higher” prices ahead for the next 20, 30, 40 and 50-day periods.

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Tradespoon AI-driven tools sorts which stocks to trade into this virtuous cycle

It just doesn’t get much more bullish than this scenario, but the question is which stocks to trade into this virtuous cycle. And this is where my Tradespoon AI-driven tools do all the hard work of sorting through the many stocks to pinpoint the best trades to take full advantage of where the highest returns in the shortest amount of time can be executed.

Special time to trade semiconductor sector

I have a few favorite names within the group of stocks noted and invite all readers of this column to join my stock advisory service RoboInvestor today so as to get in on my upcoming recommendations to take full advantage of this sector rally. Some stocks in broader semiconductor space are clearly overbought, while some are in the very early stages of breaking out to the upside. It’s a special time to trade this sector because when the chip space gets hot, there’s a lot of money to be made.

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Now is great time to eliminate risk and drive reward in your portfolio, especially when there is a geopolitical risk at play. Be it the China trade war, the rising tensions with Iran or the potential for a hard Brexit on the horizon, my AI tools sift through all the negative media noise and find winner after winner, showing no emotion and running purely on an “always thinking, always learning” algorithm-based platform the biggest and hottest hedge funds depend on.

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 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money

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