Markets Too Comfortable: Your Summer Game Plan
VIX at 16.73 signals danger ahead. Dr. Alex Koh's 4-move summer strategy for family investors: when to hold, when to wait, and how to prepare for the last dip.
TABLE OF CONTENTS
The 13-Month Sideways Trap: Why SMH $251 Could Be Your Next Entry Signal
The Family Investors Newsletter - June 19, 2025
After 13 months of sideways action, SMH has been testing our patience. The chart tells the story clearly - we've been trapped in a range between approximately $235-$275, and frankly, buying semiconductors at current levels is pure FOMO territory. But selling after waiting 13 months of "buying the dip" would be equally foolish.
The data suggests we might finally get the fear opportunity we've been waiting for.
The 13-Month Sideways Reality Check
Look at the SMH chart. Thirteen months of going absolutely nowhere. We've seen this pattern before - extended consolidation periods that frustrate both bulls and bears before the next major move. The technical setup suggests we could see one more test of support around $251 before any meaningful breakout attempt.
This isn't doom and gloom - it's mathematics. When you've waited 13 months for semiconductors to do something meaningful, you don't chase them at current levels. You wait for the market to give you what you want: genuine fear and compelling entry points.
The $251 level represents more than just technical support. It's the difference between buying expensive and buying smart. After 13 months of patience, why would you abandon discipline now?
BuyTrigger Analysis: The Numbers Don't Lie
Current semiconductor prices versus our systematic entry levels tell the complete story:
NVIDIA (NVDA): Trading at $145.48, but our BuyTrigger sits at $111. That's a 31% premium to our systematic entry point. The Value Trigger of $136.83 shows we're still paying full price for future growth that may not materialize.
Broadcom (AVGO): At $251.26 versus a $182 BuyTrigger - a massive 38% premium. Even worse, the Risk Transfer shows -27.96%, meaning you're taking on significant downside risk for minimal upside potential.
Micron (MU): Perhaps the most telling example. Trading at $121.82 with a BuyTrigger of $85. The Value Trigger of just $33.68 and Risk Transfer of -72.35% screams "stay away" at current levels.
Taiwan Semiconductor (TSM): The only exception showing positive risk transfer at +16.13%, but even here we're paying $213.50 versus a $165 BuyTrigger.
The pattern is clear: Semiconductors are priced for perfection while fundamentals suggest patience is the better strategy.
What SMH $251 Actually Means for Individual Stocks
If SMH tests the $251 support level, our correlation analysis suggests some compelling individual opportunities could emerge:
- NVIDIA could drop to $137 - still above our $111 BuyTrigger, but getting interesting
- AMD might test $118 - approaching more reasonable valuations
- Micron could hit $115 - finally moving toward our $85 systematic entry
- Taiwan Semi at $205 - much closer to our $165 BuyTrigger
- Broadcom around $241 - still expensive but improving
Here's the key insight: These aren't crash scenarios. They're normalization opportunities after 13 months of going nowhere.
The SMH Weight Distribution Reality
Understanding what drives SMH helps explain why patience matters:
- NVIDIA: 20.9% weighting - The tail wagging the dog
- Taiwan Semi: 11.6% - Foundry exposure with geopolitical risk
- Broadcom: 9.4% - Infrastructure play trading at premium valuations
- AMD & Micron: 4.7% each - Smaller weights but higher volatility
When NVIDIA sneezes, SMH catches pneumonia. But that concentration also creates opportunity when fear finally arrives. The $251 level could trigger systematic selling across all holdings, creating the broad-based discount we've been waiting for.
Why Buying Now is FOMO, Selling Now is Foolish
Let's be brutally honest about the current situation:
You've waited 13 months for semiconductors to break out meaningfully. They haven't. Buying now because you're tired of waiting is textbook FOMO behavior - exactly when systematic investors should exercise maximum patience.
But selling after 13 months of disciplined holding would be equally destructive. You don't abandon positions just before potential resolution of a consolidation pattern.
The systematic approach: Hold what you have, prepare cash for better entry points, and wait for the market to provide genuine fear-based opportunities.
This isn't market timing - it's systematic opportunism based on mathematical models that remove emotion from investment decisions.
Risk Transfer Analysis: The Market is Warning You
The Risk Transfer percentages from our BuyTrigger analysis paint a sobering picture:
- NVIDIA: -5.95% - Minimal downside protection
- Broadcom: -27.96% - Significant downside risk
- Micron: -72.35% - Extreme vulnerability
- TSM: +16.13% - Only name showing positive risk transfer
- Dell: +21.81% - Hardware exposure with better risk/reward
Translation: Most semiconductor names are priced for best-case scenarios with minimal margin of safety. This is precisely when systematic investors exercise patience rather than chase momentum.
The $251 Fear Opportunity Game Plan
Here's the systematic approach if SMH tests $251:
- Don't panic - This could be the setup we've waited 13 months to see
- Prepare capital - Have 10-15% of portfolio allocation ready for deployment
- Use staged entries - Don't blow all ammunition at $251
- Focus on quality - NVIDIA and TSM offer better risk/reward than AMD or Micron
- Monitor individual levels - Each stock will have its own optimal entry zone
Remember: This is speculation based on technical analysis and correlation models. The $251 level may never be tested, or it could be broken decisively. Systematic investing means being prepared for multiple scenarios.
The Patience Game: 13 Months Down, Possibly One More Test to Go
After 13 months of sideways action, semiconductor investors face a choice: chase current levels out of frustration or maintain systematic discipline for potentially one more major opportunity.
The data suggests patience. BuyTrigger levels remain significantly below current prices. Risk Transfer analysis shows minimal downside protection. And the technical setup points to possible retesting of $251 support before any meaningful breakout attempt.
Bottom line: Don't buy semiconductors now - you're paying full price for assets that have gone nowhere for over a year. Don't sell either - you've already demonstrated 13 months of patience.
Wait for the fear. Wait for the $251 test. Wait for systematic entry signals that align mathematical probability with emotional opportunity.
That's how you build generational wealth: not by chasing what's already expensive, but by preparing for what could become attractively priced.
This is speculation, not investment advice. The semiconductor sector remains volatile and subject to multiple risk factors including geopolitical tensions, supply chain disruptions, and cyclical demand patterns. Always conduct your own research and consult qualified financial advisors before making investment decisions.
The next few weeks could determine whether semiconductor patience pays off or requires additional waiting. Either way, systematic investors stay ready while emotional investors chase or panic.
Disclaimer:
This blog post is for informational purposes only and does not constitute financial advice. The views and opinions expressed in this post are solely my own and are based on my personal analysis and experience. All information is provided on an as-is basis, and while I strive to ensure accuracy, I make no guarantees regarding the completeness, reliability, or accuracy of the information provided.
Investing in stocks and financial instruments involves risk, including the potential loss of principal. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. This blog is intended as a personal journal to document my thoughts and strategies, and should not be taken as a recommendation to buy or sell any securities.
By reading this blog, you acknowledge that I am not responsible for any investment decisions you make based on the information provided here. Please exercise due diligence and consider your own financial situation and goals before making any investments.
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