(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)
The chipmaker bloodbath continues after being triggered by a wave of selling that stared on November 29 in the entire technology sector. But the sell-off in the chips has been far worse than the overall group, with the iShares PHLX Semiconductor ETF (SOXX) down nearly 7 percent over the past five days.
Shares of Nvidia have fallen by 9 percent, while Lam Research has dropped by nearly 18 percent in just five days. The market is moving extremely fast; these are the stocks that have been some the most significant performers of the year. The speed at which the stocks are moving illustrate just how crowded many of these trades have gotten over the course of the year. These are stocks that had all been up over 100 percent through November 24.
Micron Testing Deal Price
Micron shares have fallen from around $50 to $40.50 over the course of just a few days. Volume has spiked, while the relative strength index has collapsed on the hourly chart. For now, the stock seems to be finding some support in the $40.50 to $42 range, refilling a gap created at the end of October.
It is important to remember that at $41, Micron issued a secondary offering. That matters because should the stock break much below that deal price, it could trigger another wave of selling. (See more: Micron Shares Could Rally After Stock Offering.)
Nvidia Testing Critical Uptrend
Nvidia shares have also fallen sharply over the past couple of days, but for now, the stock has found support around $195.
It will be critical to watch the uptrend in the stock at this point. That could be key to which way Nvidia shares go from here. A break below the purple uptrend line could also signal further selling ahead. (See also: Nvidia Could Fall 60% After Bubble Bursts.)
Lam Research Searching For A Bottom
Lam Research has found support currently at around $186. The move lower was fast, because unlike the other two stocks, Lam broke a long-term uptrend, and could be seen much more bearishly then the other two stocks. For Lam, downside risk could be towards $170 should the $186 level not hold.
The move lower in these high flyers has been fast and furious, and the speed is breath-taking. The pace at which the market moves today due to technology can be overwhelming.
Remember, the machines can move far faster than your fingers can type. Keep that in mind.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.