Market Overview

Slew Of Semiconductor Earnings Could Elevate This ETF

Slew Of Semiconductor Earnings Could Elevate This ETF
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Semiconductor stocks and the related exchange traded funds (ETFs) have stumbled a bit in recent weeks due to escalating fears about the trade spat between the U.S. and China.

The technology sector depends on ex-US markets for a substantial portion of sales and chipmakers are a big part of that equation, underscoring the semiconductor space's potential vulnerability to an ongoing trade war between the U.S. and China, the world's two largest economies.

What Happened

Some of the major semiconductor makers, notably Texas Instruments Inc. (NASDAQ: TXN) and Qualcomm Inc. (NASDAQ: QUAL), have already reported earnings for the most recently completed quarters, but more marquee reports from the chip arena linger.

Those reports could provide an opportunity for semiconductor equities to snap out of their recent doldrums and for aggressive traders to tap leveraged ETFs, including the Direxion Daily Semiconductor Bull (NYSE: SOXL). SOXL attempts to deliver triple the daily returns of the widely followed PHLX Semiconductor Sector Index (XSOX).

Why It's Important

Again, some of the big-name components in the PHLX Semiconductor Index, such as Qualcomm and Texas Instruments, have already reported earnings, but SOXL merits consideration in the days ahead. Dow component Intel Corp. (NASDAQ: INTC) steps into the earnings confessional after the close of U.S. markets on July 26.

Throughout August, five of the top 10 components in the PHLC Semiconductor Index report results, including the top two holdings, Broadcom Inc. (NASDAQ: AVGO) and NVIDIA Corp. (NASDAQ: NVDA). NVIDIA, a trader favorite and 8.1 percent of the index's weight, reports on Aug. 9th.

Disappointments and/or negative trade-related commentary for upcoming semiconductor earnings calls could put the spotlight on the Direxion Daily Semiconductor Bear 3X Shares (NYSE: SOXS). SOXS looks to deliver triple the daily inverse returns of the PHLX Semiconductor Index.

What's Next

Leading up the semiconductor earnings parade, traders are leaning bullish when it comes to SOXL and SOXS. Over the past month, the bullish SOXL is averaging daily inflows of $1.21 million, according to issuer data. During the same stretch, the bearish SOXS is averaging daily outflows of almost $649,000.

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