Nvidia, AMD Pull Back As Biden Administration Weighs Ban On AI Chip Exports To China: This Fund Tracks The Sector, Offers 3X Leverage

The semiconductor sector was losing ground on Wednesday following a report the U.S. government may ban the export of artificial intelligence chips to China to curb its technological advancements.

NVIDIA Corp NVDA and Advanced Micro Devices, Inc AMD opened the trading session down 2.9% and 1.9%, respectively.

Marvell Technology, Inc MRVL started trading 3.33% lower, while ON Semiconductor Corp ON and Broadcom, Inc AVGO showed comparative strength, dropping just over 1% to start the session.

Bulls came in and bought the dip intraday, causing the five chipmakers to rebound off the lows, with AMD, Broadcom, Marvell and ON Semiconductor rising over Tuesday’s high-of-day before pulling back slightly.

Direxion Daily Semiconductor Bull 3X Shares SOXL opened Wednesday’s trading session down over 5% before rebounding to Tuesday’s high-of-day, where the ETF rejected and gave back some of its daily gains.

The ETF is a triple-leveraged fund that tracks a number of semiconductor companies through its holdings, with popular companies such as AMD making up 7.03% of the fund and Nvidia weighted at 8.81%.

Texas Instruments, Inc TXN, which opened down 0.94% Wednesday, makes up 7.99% of the fund, and the third largest holding, Broadcom, is weighted at 7.95%.

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The SOXL Chart: SOXL was forming an inside bar pattern on Wednesday, trading within Tuesday’s range and attempting to close above the eight-day exponential moving average. The pattern leans bullish in this case because the ETF is trading in an uptrend and the inside bar was forming near the top of Tuesday’s candlestick.

• SOXL’s most recent higher high was formed on June 16 at $26.79 and the most recent higher low was printed at the $21.52 mark on June 23. The ETF also formed a bullish double bottom pattern on June 23, when paired with similar price action near the $21.50 level on June 8.
• Bullish traders want to see SOXL break up above Tuesday’s high-of-day later on Wednesday or over the next few trading days, suggesting the uptrend will remain intact. Bearish traders want to see SOXL break down from the pattern, which could negate the uptrend.
• SOXL has resistance above at $27.30 and $30.57 and support below at $22.12 and $17.66.

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Photo courtesy of Nvidia.