Semis vs Everything
RLT Newsletter
Big tech got hammered on Monday, with GOOGL and AMZN leading the selloff. GOOGL closed down 4.99%, while AMZN finished the day lower by 4.75%. Software continued its brutal descent as well. MSFT closed down 3.18%, ORCL fell 5%, and PLTR dropped another 6.98%. Software remains firmly out of favor, and the market is punishing investors who own it.
SPY Daily Chart
Weak Stay Weak, Strong Stay Strong
Meanwhile, the story of 2026 continues. The weak are getting weaker and the strong are getting stronger. Software has struggled all year while semiconductors have continued to lead, and that trend remains firmly intact.
Investors appear increasingly concerned about the circular financing dynamic taking place among the large AI players. The massive capital expenditures being committed by big tech and the $700 billion being spent this year from the top five spenders has to have an eventual payday. If that dynamic begins to break down, it could become a serious problem for companies spending hundreds of billions on AI infrastructure.
The real beneficiaries of the AI boom continue to be the picks-and-shovels plays, namely the semiconductor companies. For now, that remains the dominant theme driving this market. The bigger question is whether semiconductors can continue carrying the broader market if the Trillion Dollar Titans keep lagging and, in some cases, falling out of the sky. MU’s earnings report on Wednesday could provide an important clue.
SiTime Corporation
One of my favorite charts in the market right now is SITM, and its technical structure tells a bullish story. Following its last earnings report, the stock exploded higher on a massive gap-up move. That gap could not hold, and the stock eventually sold off enough to fill it completely.
Once the gap was filled, buyers stepped in aggressively and established clear support. That behavior suggests the move lower was not an exhaustion gap, but rather a stock that simply became overheated and needed time to consolidate before moving higher.
Since then, SITM has formed an inverted head-and-shoulders pattern directly above support, anchored by a large bearish hammer candle. That is the candle I used as the basis for a trade when I first discussed SITM in the RLT Swing Trade Group.
As long as that candle continues to hold as support, the bullish thesis remains intact and SITM has a strong probability of pushing to new all-time highs. The 1.618 Fibonacci extension projects a target just above $1,000. If semiconductor leadership continues, SITM remains one of the strongest-looking charts in the market.
For now, all eyes are on MU Wednesday evening. The market’s reaction could tell us a great deal about the health of the most important sector in the market and whether semiconductors are prepared to keep carrying the torch.
SITM Daily Chart
Palantir Technologies
I almost didn’t share this chart because the trend is so terrible and the sector is so hated right now. However, PLTR touched its 100-week SMA today, making this a level worth watching closely to see whether buyers can establish at least some short-term support.
The stock has now logged four consecutive bearish sessions and has fallen roughly 27% in just 13 trading days. It’s safe to say PLTR is in a C-wave decline, which makes stepping in front of this train particularly challenging. C waves tend to be fast, vertical, and brutal.
That said, this is the first actual retest of the 100-week SMA. Because of that, I think there is a reasonable case for a short-term bounce that could produce a 5% to 10% move if the moving average can hold.
However, when I zoom out and look at the larger pattern, combined with how aggressively software stocks are being sold across the board, I still see a path for PLTR to trade below $100 before this correction is complete.
If the 100-week SMA does provide support and a bounce develops, the 100-day SMA would be my ultimate upside target.
PLTR Daily Chart
Swing Trade Master Class | August 5th
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Past performance is not indicative of future results. All trading and investing involves risk, including the potential loss of principal.
