Technology stocks closed modestly lower today, outperforming the weakness in the broader market heading in to the holiday weekend. The Nasdaq 100 (QQQ) fell 0.4% while the S&P 500 (SPY) fell 0.7%, marking a two-month closing low.
The Nasdaq 100 (QQQ) is quickly approaching support at the 130 level, near its 50 day moving averages. The S&P 500 broke through its 50-day moving average yesterday after bouncing of the key support level on Tuesday.
Semiconductors (SMH) got crushed this week, falling 3.6%. British Dialog Semiconductor fell 14% this week on reports that Apple (AAPL) may bring some of its chip business in house. This sparked some concern among Apple’s massive supply chain, mostly chip makers. While the largest company in the world is great customer to have, customer concentration is a risk that also weighs on a stocks earnings multiple. Semiconductors have had a huge run so a pullback seemed due but the iPhone 8 cycle is still in front of us. Applied Optoelectronics (AAOI) raised first quarter guidance last night. The company has now reported four consecutive blow-out quarters. The stock closed up 11% after gapping up over 20%.