Fund Dropped Nearly 3% on Wednesday
Key Takeaways
- The iShares Semiconductor ETF dropped nearly 3% on Wednesday amid heightened volatility within the chip sector after Monday’s global stock market selloff.
- The fund has fallen below the closely watched 200-day moving average, with a brief attempt to reclaim the indicator on Wednesday failing after the price closed towards its session low.
- The SOXX ETF may encounter support at key chart levels including $195 and $179, while running into overhead resistance at $215 and $239.
The iShares Semiconductor ETF (SOXX) dropped nearly 3% on Wednesday amid heightened volatility within the chip sector after Monday’s global stock market selloff. This week’s decline coincided with a report that artificial intelligence (AI) darling Nvidia’s (NVDA) highly anticipated Blackwell chips would be delayed by at least three months.
Over the last week, the ETF has come under increasing pressure from growing concerns about the health of the U.S. economy and disappointing earnings from chip giant Intel (INTC), which commands a 2.93% weighting within the fund’s portfolio.
On Wednesday, the fund fell 2.8% to close at $199.29, its lowest level since mid-April.
Below, we take a closer look at the SOXX ETF chart, while using technical analysis to outline important support and resistance levels to watch out for.
Failed Attempt to Reclaim 200-Day Moving Average
Since topping out last month, the SOXX ETF has undergone a sharp correction of around 25% on above-average volume, indicating conviction from institutional investors behind the move.
More recently, the fund has fallen below the closely watched 200-day moving average (MA), with a brief attempt to reclaim the indicator on Wednesday failing after the price closed towards its session low.
Monitor These Important Support Areas
If the fund continues to move lower, investors should monitor two key areas where the price could attract buying interest.
The first sits around $195, just 2% below Wednesday’s close, This level on the chart could see buyers seeking entry points near a horizontal line that connects the December 2023 peak and January trough, which also closely aligns with Monday’s selloff low.
A breakdown below this level may lead to a retest of the $179 area, an area where the ETF would likely find support from the July 2023 swing high and January swing low.
Key Resistance Levels to Watch
If buyers reclaim the 200-day MA, it’s worth watching several important price levels on the chart where the fund may encounter selling pressure.
Firstly, an initial attempt at a recovery may run into resistance around $215 near a range of comparable trading levels between late February and early May that roughly align with the Aug. 2 pre-gap low.
A move above this area could see the fund climb to $239, a level where sellers may be happy to lock in profits near the March and May highs, which current sit in close proximity to the downward sloping 50-day MA.
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