The Thinker
Risk-on returns to chips and AI after the Situational Awareness fire-sale. Korea, capex and capacity all remain unresolved — but what matters for the active trader is perception among major participants, and it just pivoted.
Friday's premarket sentiment is clearly risk-on for chips and AI (see CRWV, INTC, RMBS). The reported fire-sale of Situational Awareness LP assets to Citadel marked a very clear pivot in semi and AI names across the board. From a technical, scientific perspective, there are more important features of the past month's sell-off than just this latest development with Situational Awareness. Korea is still a wildcard. Capex is still an unresolved balance among the hyper-scalers. Production capacity is a real challenge for even the largest chipmakers. But what really matters, for the active trader, is perception among major market participants, and they are clearly interested in major names at the current levels.
It is possible to overthink an opportunity. After all, not so much has changed between today and two days ago. However, by the time the stars align for the cautious, they'll likely be choosing among significantly more expensive options. Experienced investors will likely be inclined to engage, holding their stops near yesterday's opening lows.
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