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Hello everyone, welcome to verifiedinvesting.com . My name is Gareth Nightingale, I'm the chief market strategist here. And in today's video, we'll take a closer look at the massive semiconductor sell-off as the "blood" is already starting to flow in the streets of these players. The question is, are there opportunities here?
And the answer is yes, and they are very close. So I will reveal where I am going to open long positions. Key names like Micron, as well as SanDisk and some others. Remember, a few months ago I warned that this was a bubble and massive corrections were in store, and they are certainly ongoing as SanDisk is now trading around 1200.
That's a drop of more than 50% from the highs, and the stock is approaching a significant opportunity for a rebound. Is this the bottom? I don't think so. But that doesn't mean there's no chance for stocks to rebound by 20-30% at a decent level. Now we will discuss in this video why this sale is happening because you need to understand it for future occasions.
This is what I warned about - competition. When you have profits at 80% or 90%, it's inevitable that other companies will say, "Wow, this is incredibly profitable, so let's start producing it." And China is doing just that. And that's scary, it's scaring investors here in the US. Do I think this trend is completely over?
No. But again, I believe that the highs we have seen will become cyclical tops , and after significant rebounds, we will likely see further declines. Well , let's get to the arguments. Look at this. That's what's really happening, isn't it? You have ASML, which makes these lithography machines. And again, this Chinese stock Shanghai Micro Electronics is starting mass production of the same type of technology.
OK. So now this is the key point. This is not all the technology that ASML has, but again, it is important that they are starting to produce such things. And that essentially scares the market because it shows that China is going to produce everything that has high margins, and that pushes ASML shares down , which also drags the entire sector down.
Okay, so again , keep that in mind. This is just the beginning, which will lead to rebounds, because eventually we will still see companies like ASML have excellent earnings over the next few quarters, as will SanDisk, Micron, and others. But this is the most important thing. Next we have CXMT, which just went public on the Shanghai Stock Exchange in China, and its shares have soared 466%.
They are a DRAM manufacturer, and of course that scares investors about Micron and SanDisk, which were two of the most important companies during the semiconductor sector's growth. For example, if we look at Nvidia, which, despite its importance, has not been such a significant growth leader, what can we say about Micron and SanDisk?
They were leaders during the uptrend, and now they are leading the market in the downtrend. So, essentially, this is what happens, right? When you have cyclical processes that go up and down, it's not the same as having a patent on a drug, you know? If Pfizer or AstraZeneca releases a new drug, they dominate the market for that treatment for many years.
When it comes to DRAM, there's nothing extraordinary here. And even what we see with ASML, even though it's a slightly more specialized area , shows that China is still capable of producing such equipment. And this, again, will significantly impact the margins and profits of these companies. Remember, Micron can continue to sell the same amount of memory as it does now, but if the margin drops by, say, half, to 40%, then guess what?
Their profits will be halved. So again , even if they increase sales by 30% next year, but margins drop to 40%, they will still make less. That's why, if you look at P/E ratios in a historical perspective—I've been talking about this in these videos until I'm blue in the face, and people are still saying, "Oh, Gareth, you're crazy." " P/E ratios, this and that, this is the new paradigm." " This is a completely different situation." Unfortunately, this is not the case.
And this is what we see now. Therefore, low P/E ratios in semiconductor manufacturers usually indicate that they have reached a peak. In fact, it is worth buying shares of semiconductor companies when the P/E is high, because they do not yet have high margins. The margin is at a very low level. And that's when a new cycle begins, pushing margins up.
This is very counterintuitive, and I understand that. But if you can learn it, as I have had to many times over many cycles in the semiconductor sector. I had to learn this very fact. I tried to tell a lot of people about it. Some of you listened, and that's great. Um, but again , this is just information you should know.
Now, if we switch here, friends, let's actually move away from this. Let's move on to the graphs and look here. So, NASDAQ futures fell by more than 1% this morning and continue to fall sharply. Note that this pivot low has been broken. So, this tells us that there is an additional breakpoint. This potentially opens the door for a move all the way to this level, which, believe it or not, is still 1,500 points below NASDAQ futures.
And again, the NASDAQ has n't even opened yet, and the futures are already showing a 300-point drop. That would be about 1,800 points on the NASDAQ. If we go to the NASDAQ Composite, actually we can even, yeah, let's go to the NASDAQ Composite and take a look. And you see the NASDAQ reopening here. And if we keep selling , look where it goes.
This is a great level here on NASDAQ. This is where I would expect a serious rebound. Now, as for semiconductors, which is what I'm really focused on in this video, I want to talk about key names like SanDisk. At what level would I start buying a little bit? " Buy a little" is the key term here. This is a technical term, believe it or not.
That means I'm not going all in because I'm honest with myself and honest with you when I say I don't know if it's going to be the minimum. So I go in with a small amount. If this is the minimum, great. It was an easy, stress-free deal. I earn 20-30 %. If it falls lower, I give myself the opportunity to increase the position and apply cost averaging .
We will get a bounce on SanDisk. The question is how much panic will force SanDisk or Micron to sell. So if we look at this chart, let's go to SNDK, SanDisk is seeing some serious sales here, and look where it is. It really is reaching a very significant technical level today. I might even try trading it today, friends.
This could be a fantastic opportunity for intraday trading. OK. Now, is this a turning point ? This is actually where I plan to open a small long position, around the 1180 level . But I will look to add positions, there is additional support here at 1050 and additional support below at 1000. And one of the things I am watching is the presence of this trend line.
Look at this, guys. It begins. See, notice how these lines start to converge, right? So, you have this line here. You have this one, which is a little lower. But, in short, let's drop it, and once they start to get closer , those become my levels for adding positions. And notice how it becomes like a spider web.
Also, what we should pay attention to is how big the move has been since August 2025 and what are the Fibonacci levels? Right? So, we see that we are right at the 50% retracement level right now. So this gets my attention. Yes. OK. That makes sense. This is a two-factor level: gap filling and 50% pullback.
So I open a small position there. If the price bounces back, as I said, great . It was an easy deal. Deals are often not that simple. So, I have the next buy level below, let's say $50 below, then another $50, then another $50, and so on. And I just gradually average the value in that zone, slowly accumulating assets.
The rebound will eventually happen. The question is how much panic pushes the price down. Remember the main driving forces on both the rise and the fall. So what was the driving force here? You would say fundamental indicators? Well, obviously not if the price has dropped this low . People thought it was fundamentals because of the low P/E ratios, but they didn't understand the cyclical nature of the market and the fact that other companies could mass produce DRAM, memory, and everything else, right?
Uh, and storage devices. So the answer is: it was greed. Now, when we reach this level, you will start to see fear. Fear will become the main driver. And, honestly, somewhere in the middle is probably a fair assessment, right? It's like a pendulum swinging: it swings one way to the extreme—it's immense greed , and then it swings the other way—and reaches an extreme fear.
But in reality, somewhere in the middle is where the general consensus is on where the price should be . So my goal is always to short when there is extreme greed and buy when there is extreme fear. And then once we reach fair value, I just close. I am no longer looking for extreme greed. I don't want to become greedy, because that's how you can lose everything.
I just want to take small, steady steps. So , that's what we're looking at here. And if we move on to Micron, then Micron is another option. Take a look at this great gap closure right here. That's where I'll be looking. That's only $90 below where we're currently trading on Micron. Huge gap closure right there.
MRVL, take a look at this option, guys. MRVL is starting to get closer. I have an important zone right here, around 170. That's only about $10 off pre-market levels here. And we could even look at other names as well. We could go on and on. Uh, but in the end, when all is said and done, these are the major players.
And the reason I'm focused on SanDisk and Micron is because , first of all, they're quality companies, right? Just like MRVL. And Nvidia , you can look at this graph, but there aren't such wild fluctuations, right? So for me as a technical trader, I'm always looking for something that has soared to incredible heights.
Okay, then it's going to fall incredibly hard because it has to wash away all the liquidity, all the margin and everything else, and you get these extremes. When a stock like Nvidia trades, it has to be really oversold before it reaches the same state of mass fear. And because it's a bigger name and one of the biggest companies right now—Apple is a little bit bigger in market cap, but that creates a scenario where you don't get as many of those wild swings.
Now, if you are a long-term investor, this is a great option because it is not as volatile. But again, I'll focus on those titles here. Now, just a reminder, guys, this is really important right here. Uh , don't forget that these videos are sponsored by Rumble and the Rumble wallet. I use it for swing trading and cryptocurrency swing trading.
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