Semiconductors: Widespread Stock Market Downturn, No Company Spared

Soitec tumbles as heavyweights deepen the decline

Leading the declines, SOITEC plunges 7.27%, a sharp drop for the substrate specialist, after experiencing a spectacular rally in recent weeks—its RSI was still at 83, indicating a significant overbought condition. ASM INTERNATIONAL falls by 3.21%, BE SEMICONDUCTOR by 2.99%, and notably ASML, a heavyweight in the sector with nearly 450 billion euros in market capitalization, decreases by 2.70%, causing a mechanical drop across the entire sector. STMICROELECTRONICS, the second-largest market cap in the panel, loses 2.59%.

The downward trend extends beyond just the chip sector: the broader technology sector falls 2.57%, while the industrial sector drops 2.53%, indicating widespread selling pressure on European cyclical stocks. The CAC 40 and SBF 120 lose 1.74% and 1.75% respectively in the morning, within an environment where the VIX remains elevated at 22.37.

Short-term momentum weakened despite still intact technical fundamentals

For the investor, today's session highlights the sector's vulnerability to profit-taking when certain stocks reach excessive levels. The case of Soitec is telling: an RSI of 83 indicated a risk of consolidation, which has now materialized. On a sectoral scale, the assessment is more nuanced. The RSI weighted by market capitalization stands at 43, in neutral territory, far from a panic signal. The sector's weighted average price is moving below its 50-day moving average, confirming a downward medium-term momentum. However, it remains above the 200-day moving average, preserving the long-term upward trend. The sector's MACD, having crossed below its signal line, indicates waning momentum. Overall, this paints a picture of correction within a long-term trend that remains unchallenged at this stage, but its short-term continuation seems dependent on the stabilization of momentum indicators. The level of implied volatility, still above 22, suggests caution in the upcoming sessions.