Despite a 30% five-day loss in SOXS, some keep betting on a semiconductor pullback while taking profits in Nvidia and SOXL
Traders work on the floor of the New York Stock Exchange (NYSE). (Photo courtesy of Reuters)
Korean retail investors, who had engaged in large-scale selling as the U.S. stock market rebounded sharply, shifted to a net buying position of over $100 million for the week in just one week's time. As the U.S. market's rally continued, buying pressure driven by optimism appears to have outpaced the scale of profit-taking.
According to the Korea Securities Depository's SEIBro on April 20, Korean retail investors net-bought $102.25 million in the U.S. market for the period from April 9 to 15 (based on settlement dates from April 13 to 17). This marks a shift to net buying in just one week, following a massive net sell-off of $950.9 million in the preceding week.
During this period, the S&P 500 index surged by 3.5% and the Nasdaq index by 6.1%. Subsequently, for the two days from April 16 to 17, the S&P 500 and Nasdaq indexes rose an additional 1.5% and 1.9%, respectively.
The most net-bought stock by Korean retail investors for the period from April 9 to 15 was Microsoft with a buying surplus of $107.89 million. Microsoft's stock, which had plummeted this year due to concerns that Artificial Intelligence (AI) would largely replace the software industry, saw a steep rise last week. Microsoft's stock price rose 14.0% in the five days leading up to April 17, narrowing its year-to-date decline to 12.5%.
SanDisk, a flash memory company, saw continued net buying of $104.84 million even as its stock, after an unstoppable run to record highs, fell back by 5.6% on April 15. The net purchase amount for SanDisk increased significantly from $25.44 million in the previous week.
Optimistic that the demand for memory semiconductors will continue to grow in the AI era, Korean retail investors net-bought $96.36 million of the Roundhill MEMORY ETF (DRAM). This is a sharp increase from $26.22 million in the previous week. This ETF invests 75% of its total portfolio in the top three DRAM semiconductor companies: Samsung Electronics, SK Hynix, and Micron Technology.
While semiconductor stocks continued their rally, bets on their decline also persisted. Korean retail investors net-bought $6.35 million of the Direxion Daily Semiconductor Bear 3XSharesETF (SOXS), which seeks to return three times the inverse of the daily performance of the ICE Semiconductor Index. This marked the second consecutive week of a buying surplus, following $125.27 million in the previous week.
However, investors who purchased SOXS in the preceding week (from April 2 to 8) likely suffered significant losses as the price of SOXS plummeted by 30.0% during the following period from April 9 to 17. Nevertheless, with the prolonged strength of semiconductor stocks, expectations of an imminent pullback appear to have intensified, leading to continued bets on a decline. The ICE Semiconductor Index rose for 13 consecutive trading days from March 31 to April 17.
Aggressive chase-buying was seen for CoreWeave and Navius Group, neo-cloud companies that provide dedicated AI data center services. CoreWeave showed a buying surplus of $58.02 million, and Navius Group had a buying surplus of $38.76 million. The stock prices of CoreWeave and Navius Group hit a bottom along with the broader market on March 30 and surged by 71.6% and 80.8%, respectively, by April 15.
Oracle saw net purchases of $53.80 million as its stock began to jump in earnest for the period from April 9 to 15, slightly later than the overall market. During this period, Oracle’s stock price rose by 23.2%. Consequently, its year-to-date decline narrowed to 10.2% as of April 17.
Tesla continued to see a buying surplus of $48.72million, following the previous week, but as the stock price rebounded, the scale of net buying was significantly reduced compared to the $125.27 million of the preceding week. Tesla’s stock hit a short-term bottom on April 8 and rose 16.7% by April 17.
As Palantir Technologies’ stock rose along with the broader market, it was notable that the Direxion Daily Palantir Bull 2X Shares ETF (PLTU), which seeks to return twice the daily performance of Palantir’s stock, showed a buying surplus of $42.69 million. This is because 2x to 3x leveraged ETFs are often used by investors aiming for 2-3 times the returns on a rebound when a stock’s price has fallen.
Amid a strong rally in momentum stocks led by the tech sector, it was also noteworthy that the Schwab U.S. Dividend Equity ETF (SCHD), which invests in dividend stocks, appeared in the top 10 for net purchases for the first time in a while, with a buying surplus of $42.07 million.
In addition, Marvell Technology, a designer of custom AI chips and optical communication semiconductors, was net-bought for $39.90 million. Marvell has recently gained attention as a beneficiary of AI, with its stock price soaring 56.0% in a month.
For the period from April 9 to 15, Korean retail investors most heavily net-sold the Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL), which had been on an upward sprint, for a total of $339.63 million. SOXL, an ETF that seeks to return three times the daily performance of the ICE Semiconductor Index, rose for 13 consecutive trading days from March 31 to April 17, surging 2.3-fold.
Profit-taking also poured in for the semiconductor stocks included in SOXL, which had risen sharply during the same period. Nvidia saw a massive selling surplus of $282.63 million, and the Granite Shares 2xLong NVDA Daily ETF(NVDL), which tracks twice the daily return of Nvidia’s stock, was also net−sold for $66.26 million.
Memory semiconductor company Micron Technology showed a selling surplus of $78.55million, custom AI chip company Broadcom had a selling surplus of $62.16 million, and AI chip and CPU design company AMD recorded a selling surplus of $40.33million. The Direxion Daily Micron Bull 2XShares ETF (MUU), which tracks twice the daily return of Micron’s stock, was also net−sold for $25.06 million.
The ProShares UltraPro QQQ ETF (TQQQ), which tracks three times the daily performance of the Nasdaq-100 Index, also saw a selling surplus of $192.09 million due to profit-taking.
Fuel cell company Bloom Energy was net-sold for $34.33 million amid a surge where its stock price soared 83.3% from its low on March 30 to a record-high close on April 14.
Amazon showed a selling surplus of $24.73million. Amazon’s stock hit a bottom on March 27 by closing below $200 and then rose 25.7% by April 17.
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