Long Gold And Short Semis Into Year-End? | Weekly Roundup

Tony Greer said he was positioned ahead of the semiconductor move, but the violent reversals over the prior two days were difficult to anticipate. The selloff looked more like a digestion of midterm results and positioning pressure than a response to a specific headline. Another speaker viewed semiconductors as breaking down: SMH had fallen from the 600s to around 455, with 350 cited as possible support. They saw room for the short to continue, described the chart as broken, and said another gap or two lower was possible, while acknowledging that conditions could change quickly.

The preferred relative trade was long gold against short semiconductors into year-end. Gold was around 4,100 and holding up under pressure, and one speaker remained long while also watching gold miners. A pullback into the 3,950s, or even 3,800, followed by a recovery toward 4,000–4,100 would be a strong response with possible bottoming characteristics. That view was not unconditional: the speaker questioned whether gold could withstand an unwind of the semiconductor bubble. Another argued gold could front-run either a growth scare or further Fed tightening.

The speakers expected natural resources and commodities to hold up better than technology if the Nasdaq weakened, citing gold miners, energy producers, industrials and basic materials as possible survivors. One speaker said the gold debasement trade could resume if liberals returned to power, irrespective of technology’s performance. By contrast, one forecast put the Nasdaq 5–10% lower by Anthropic’s event in a couple of weeks, as technology repriced after running too far. A further 10% drop in the Magnificent Seven, they warned, could leave the S&P 500 struggling below its 200-day average.

The 2018 midterm period was offered as a cautionary comparison: the S&P 500 fell from the day after the election into late December, while midterm-seasonality charts showed a peak in early October followed by a decline, rebound and another decline. Uncertainty also surrounded possible effects on Texas data centers, AI-related capital spending and chip supply if moratoriums spread across 40 states. The speakers’ views remained exposed to sharp reversals; after three-sigma up and down days, one said they would not carry risk overnight. Another covered semis in pre-market around 5,485–5,490, bought again at 5,460, lost money trying to go long and stopped trading for the day.

One speaker remained bullish on bonds and planned to buy dips, interpreting their stability during the equity selloff as a sign of strength and viewing the October long-bond low as durable. In their view, bonds would likely need a sustained oil rally above $110–$120 to approach that low. A $10–$20 oil decline on hopes for peace with Iran could instead help markets, briefly support industrials and revive miners. The speaker considering an oil long was skeptical that the latest negotiations would produce a deal, but said headlines made the trade hard to size; oil opened the week around $105 and was near its 200-day moving average by Monday morning. A Pete Hegseth removal headline had reportedly pushed oil down about 8%. Although diesel and crack spreads had retreated substantially from their highs, the speaker was not convinced oil’s move was over.

For an oil position, the proposed approach was to place a bid below the market and a stop-entry above it, aim to be 20% invested by Friday if neither order filled, and adjust orders daily, while managing the position actively and being ready to exit. Home construction stocks were unchanged on the year despite oil at $110, diesel at $7 and mortgage rates around 7%; one speaker said they had rallied as the bond market bottomed and might avoid a semiconductor selloff. XHB and ITB were described as similar ways to gain exposure.