In only a week, the bullish run in SanDisk (SNDK) faded. SNDK stock lost 25.27%. Speculators who bought shares recently might not get their money back if shares do not recover. Fortunately, earlier investors are up by as much as 4,251%, assuming they bought shares at the 52-week low.
Micron Technology (MU) did not fare well, either. MU stock fell by 19.6%, retracing a share price not seen since mid-June.
Investors rotated out of the cyclical chip sector. They bet on the sell-off in software stocks coming to an end. Adobe Systems (ADBE), which sells subscriptions to creative graphics software, added 13.6% to close at $219.72. In June, ADBE stock plunged from a ~ $280 to as low as $190.12. At a P/E of 12.6 times, bargain hunters have a good chance of starting a position at the stock’s absolute bottom.
What Triggered Downturn
South Korea’s stock market depended greatly on SK Hynix and Samsung (SSNLF). But as more leveraged ETFs encouraged traders to speculate, a drop of 5%-10% in the index set off panic selling. Panic was so severe that the South Korean exchange had to halt trading when KOSPI fell below 8,000.
Anytime the chip stocks sold off, they would rebound. Watch out for software stocks like Snowflake (SNOW), Salesforce (CRM), or ServiceNow (NOW) giving up their gains. If that happens, the chip stock bear market might end as fast as it started.
