Macro Report/Insights: Semi's positioning

NVDA, SMCI and the tech sector

“Misconceptions play a prominent role in my view of the world.”
― George Soros

Since the beginning of the year, semiconductor stocks have received excessive focus given their outsized role in AI. The increasing multipolarity in the world further fuels the moat of many semiconductor companies. However, market participants continue to lack a clear and consistent understanding of positioning in the semiconductor space. On March 17, I wrote a full breakdown of positioning in the semi-space:

Two main ideas from this report:

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• 

Since writing this report, the SMH 0.00%↑ ETF is down and now chopping in a range:

As I noted in the report, there are multiple layers to interpreting positioning. One of the main ones is connecting how the beta of an asset is doing in connection with its underlying valuations and the premium traders are paying in the options market.

We can see skew blew out during the rally in Semi’s and is now mean reverting:

Implied vol in SMH 0.00%↑ is now reverting back down and is more in line with the VIX now.

Simply knowing the premiums or discounts traders are paying in terms of valuations and in the options market provides significant visibility into a specific sector. When these signals are connected to the bigger-picture macro regime, you can refine your edge even more.

As we move through additional macro catalysts and implied vol begins to fall in the semi-space, the next impulse will begin to take shape. The CPI catalyst will be incredibly important for macro positioning as a whole so be sure to check out the alpha reports on this.

Continue to watch NVDA 0.00%↑ and SMCI 0.00%↑ as their implied vol falls and their prices roll over marginally. We aren’t at a place where you would want to short these stocks but monitoring their beta to the index and other sectors is critical.

If you want a full breakdown of the Semi sector and asymmetrical trades in the single-name equity space, check out the

SpearPoint Equity Alpha

publication.

Deciphering The Semiconductor Ecosystem Pt 1

Side Note/Conclusion:

Volatility in bonds and the FX market has decreased considerably. During times like this, I spend more time doing research and thinking. This sets the foundation for taking big swings in the future. For now, I am batting singles which I am happy with.

Moderating your preparation between macro volatility is one of the most important things you can do in markets.

For now………….

Thanks