The S&P index, having reached a session high of 12.43 points, has now dropped and is trading down by 4.07 points. Previously, it had also hit a session low of -6.29 points. The NASDAQ index shows a rise, up by 51.87 points or 0.25%, with session fluctuations ranging from 13.80 to 93.86 points.
The Dow industrial average experienced a high of 45.06 points and a low of -108.15 points, currently near the lower end at -97 points or -0.22%. Nvidia and AMD stocks have moved higher, with Nvidia up 1.14% and Broadcom increasing by -0.94%. SMCI, involved with Nvidia chip production, rose by 7.64%.
Us Eu Trade Deal Impact
The US/EU trade deal benefits US chipmakers, with AMD’s target price being raised from $150 to $210 by UBS. Although AMD’s stock price has recovered by 128% since a previous 65% downturn, it remains below the 2024 high of $227, as today’s high of $174.70 tested an October 2024 peak of $174.05.
The hourly chart shows AMD’s price trending upwards since April, staying above 100-hour and 200-hour moving averages, indicating bullish momentum. The current target of $174 suggests overbought conditions and possible consolidation unless the price falls below the 100-hour MA.
We see the broader market is hesitating while the tech-heavy index pushes forward, driven by a handful of large-cap names. The CBOE Volatility Index, or VIX, has been trading near a historically low level of 13, suggesting traders are not pricing in significant downside risk for the overall market. This environment makes buying protective puts on broad indexes like the S&P 500 relatively inexpensive as a portfolio hedge.
The semiconductor sector remains the primary engine, and we believe derivative strategies should be focused here. The PHLX Semiconductor Index (SOX) is up over 30% year-to-date, which confirms the leadership described in the report. The recent 10-for-1 stock split for the sector’s largest company, which became effective on June 10th, will increase liquidity and could attract more retail option traders to the entire chip space.
Technical Analysis And Strategies
For the specific chipmaker highlighted, the technical picture suggests a cautious but bullish approach as it tests a key resistance level. With the stock in a strong uptrend above its key moving averages, we would consider using bull call spreads. This involves buying a call option and selling another at a higher strike price to reduce the initial cost and bet on a measured move higher.
Alternatively, for those who see near-term overbought conditions and expect consolidation, selling options offers another path. We think selling cash-secured puts with a strike price safely below the rising 100-hour moving average is a viable strategy. This allows a trader to collect premium while waiting for a potential pullback to a stronger support level.
Historically, when a stock consolidates tightly below a major resistance level as this one is, it often precedes a powerful move. We would advise traders to watch the stock’s implied volatility closely for any significant expansion. A spike in volatility could signal that a breakout or breakdown is imminent, creating opportunities for strategies like straddles that profit from a large price swing in either direction.
