Broadcom (AVGO) came out with earnings after the close tonight, disappointing on revenues and slashing guidance. The stock was down some 7% afterhours.
Of course, the rest of the semi stocks will simply tag along tomorrow with the narrative of a weak second half creating an army of mind-controlled robotic bears, prepared to sell anything semi related that ticks into the green.
Then you will have the technical hooligans jumping onboard talking about how the SOX is now putting in the dreaded head and shoulders pattern, which it indeed will be upon a weak close tomorrow.
Already, here is some of the bearish commentary from Seeking Alpha tonight about AVGO's earnings warning:
It seems as though the general trading population is now completely sure of a second half slowdown, with one fellow experiencing incontinence of saliva while fantasizing about an impending 30% discount to share price.
While all of this makes for a wonderful session of pseudo-intellectual debate about various micro, macro and technical factors, its primarily theater and should be treated as such.
Earnings warnings may slowdown an uptrend, while creating disruption to price. However, earnings warnings will never create a lasting market top of significance after a large run in any sector. That is simply too much bell ringing, allowing the armies of mindless, financial media obsessed bears the opportunity to simply ring the cash register because the headlines are telling them to.
Markets are far too counter-intuitive in nature to allow that.
With this said, AVGO very simply isn't going to ring a bell at the top of the semi cycle. It's going to be a far more complicated, dynamic and scintillating process. And it's my thesis that AVGO, far from being a canary in the coalmine for the semiconductor sector, is simply a lonely outlier that will be completely forgotten about by Tuesday of next week.
Of course, once an opportunity is spotted in semiconductors moving forward, Zenolytics will pounce with an update of some degree or fashion.
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