SK Hynix shares climbed 8% on Wednesday. Asian tech stocks followed. They rallied because U.S. semiconductor shares rallied Tuesday. U.S. shares rallied because they stopped falling. This is what passes for causation in financial journalism.
The stocks fell earlier this week. Now they're up. Next week they'll do something else. Retail traders are writing this down like it means something. They're updating their spreadsheets. They're texting their cousins about semiconductor exposure. Their cousins are googling what semiconductors are.
SK Hynix makes memory chips. The company's fundamentals did not change between Monday and Wednesday. Revenue projections held steady. Manufacturing capacity stayed the same. Nothing happened except the price moved down and then moved up. But some guy in Seoul with a Robinhood account just convinced himself he understands global supply chains because he watched a line go from red to green.
The article says this was a broad rally. Broad means other stocks also went up. They went up because SK Hynix went up. SK Hynix went up because U.S. stocks went up. U.S. stocks went up because they were done going down. This is the entire story. A circle of price movement reporting on itself like a dog chasing its tail, except the dog has a Bloomberg terminal and writes headlines about it.
Technical analysts don't care why stocks move. We care that they moved. The why is for people who need bedtime stories to sleep at night. SK Hynix could've jumped 8% because the CEO sneezed during an earnings call. Doesn't matter. The chart doesn't ask why. It just shows you what happened after all the people who think they know why finished trading.
Somewhere right now a day trader is explaining to his wife that he's positioned perfectly for the Asian tech rebound, and she's explaining to her lawyer that she'd like to keep the house.
Photo by on Unsplash
Leave a Comment