Josh Brown Doesn't Expect Nvidia To Turn Around This Year: How Low Could The Chip Stocks Go?

Zinger Key Points
  • "Every rally is sold exactly where it should be sold. The channel is actually almost perfect," Brown says.
  • "I don't see a reason to run in here at this moment," he says.

The VanEck Semiconductor ETF SMH is on pace for its worst month since 2008, and one investor doesn't see the chip stocks turning around anytime soon.

What To Know: Ritholtz Wealth Management's Josh Brown has exposure to the semiconductor space through NVIDIA Corp NVDA, but the charts aren't giving him much hope heading into the second half of the year.

"This is in a defined downtrend," Brown said Thursday on CNBC's "Fast Money Halftime Report."

"Every rally is sold exactly where it should be sold. The channel is actually almost perfect. The symmetry there is breathtaking."

The channel Brown is referring to is the sustained downtrend Nvidia shares have fallen into by consistently making lower highs followed by lower lows.

Nvidia has been trading in a consistent downtrend since the end of March. The stock has nearly been cut in half since.

From Last Month: As Nvidia Stock Slides, Here's How To Play The Counter-Trend

What's Next: Brown reiterated that he doesn't expect Nvidia to recover in the second half of the year. He expects it to trade lower with the rest of the chip sector.

"I think you want to watch, on the SMH, $150 as a level that may offer some support," Brown said.

The VanEck Semiconductor ETF was trading around $150 in February 2020 ahead of the pandemic. Despite it being down nearly 35% year-to-date, Brown suggested the SMH could fall at least another 25% from current levels. 

"I don't see a reason to run in here at this moment," Brown said.

SMH, NVDA Price Action: At the close Thursday, the VanEck Semiconductor ETF was down 1.25% at $203.73 and Nvidia was down 2.46% at $151.59, according to data from Benzinga Pro.

Photo: courtesy of Nvidia.

Posted In: CNBCJosh BrownShort IdeasTechnicalsTechTrading Ideas

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