To The Moon

📉🐶 Every Plunge Is an Opportunity? My Take on SOXL, TSMC and QQQ

🐶 1️⃣ Every Plunge Is an Opportunity — But Only If Earnings Can Hold Up

When I see semiconductor stocks plunge, I don’t automatically assume the AI story is over. Sometimes, the market is simply repricing growth stocks because inflation is hotter than expected, interest rates may stay higher for longer, or investors are becoming nervous about how much money companies are spending on AI.

But I always ask myself one important question: Are company earnings deteriorating, or is the market simply becoming more fearful?

If earnings expectations remain strong, a sharp price decline can create an opportunity to buy quality companies at a more attractive valuation. However, if earnings forecasts are being cut, a stock can continue falling even after an already painful correction.

This is why I don’t blindly buy every dip. I want to understand what is driving the decline before deciding whether it is an opportunity or a warning sign.

💰 2️⃣ How Can AI Companies Maintain Earnings Even When Interest Rates Rise?

Higher interest rates increase borrowing costs and can make future earnings less valuable today. This is particularly important for growth stocks because much of their expected value comes from profits they may generate years into the future.

However, higher rates do not automatically mean that every AI company will suffer weaker earnings.

Here are several ways companies can protect their profitability.

🏦 A. Reduce borrowing and strengthen the balance sheet

Companies with substantial cash reserves can finance investments using their own cash flow instead of taking on excessive debt. They may also use excess cash to repay loans, reducing future interest expenses.

This matters because a company that generates strong operating cash flow has more flexibility when financing conditions become tighter.

📈 B. Issue shares instead of borrowing more money

Some companies may raise capital by issuing additional shares rather than taking on new debt. This can reduce their need to borrow and help fund expensive AI infrastructure projects.

However, issuing shares is not free money. Existing shareholders own a smaller percentage of the business after dilution, and earnings per share may fall if profits do not grow sufficiently.

Therefore, I would rather see a company fund its expansion through strong cash flow than repeatedly issue new shares just to cover rising costs.

🤖 C. Use AI to improve productivity

This is an interesting part of the AI investment story. Companies are spending billions of dollars on AI infrastructure, but they also hope to use AI to reduce operating costs and improve productivity.

For example, businesses may automate repetitive administrative work, improve software development efficiency, optimise logistics and reduce customer-service expenses.

Some companies may also slow hiring or reduce their workforce as automation improves. If these savings exceed the additional costs of AI infrastructure, operating margins could improve.

However, I would not assume every company can immediately replace workers with AI. Implementation costs, training, computing expenses and restructuring charges can offset the savings.

💵 D. Increase revenue without increasing costs at the same rate

This is one of the strongest ways to maintain earnings. If an AI company can sell more products or services while keeping its operating expenses under control, its profit margins can improve.

For example, a hypothetical company increases revenue from $100 million to $120 million while keeping operating expenses relatively stable. It may generate higher operating profit even if interest expenses increase modestly.

That is what I want to see: genuine revenue growth, strong margins and cash flow that can support continued investment.

🔥 3️⃣ Why SOXL Can Be Interesting for Short-Term Trading

SOXL is the Direxion Daily Semiconductor Bull 3X Shares ETF. It seeks approximately three times the daily performance of its semiconductor index, before fees and expenses.

That means it is designed for aggressive short-term trading, not for simply holding semiconductor stocks for years.

When semiconductor stocks rebound strongly, SOXL can deliver a powerful move. But when the sector sells off, the losses can be brutal.

For example, if the underlying index falls 5% in a day, a roughly 15% decline in SOXL would be consistent with its daily leverage objective, before fees, expenses and tracking effects. Actual returns can differ.

This is why a 13% plunge in SOXL should not be treated as an ordinary dip in a diversified investment portfolio.

My approach to SOXL is to treat it as a trading instrument. I want a defined entry, a clear invalidation level and a plan for taking profits. If the chart is weak, I would rather wait than rush into a falling market.

A sharp decline can create a rebound opportunity, but leverage also means I can lose money very quickly if I get the timing wrong.

📊 4️⃣ My SOXL Technical Analysis Plan: RSI, MACD and Support

When I trade SOXL, I don’t want to buy simply because the price has fallen 13%. I want to see whether selling pressure is slowing down and whether buyers are beginning to return.

Here are the indicators I would watch.

📉 RSI — Is the selling becoming excessive?

The Relative Strength Index (RSI) measures the momentum of price movements.

* RSI below 30: the ETF may be oversold.

* RSI recovering above 30: momentum may be improving.

* RSI around 50 or higher: bullish momentum may be strengthening.

* RSI remaining below 30 while the price keeps falling: selling pressure may still be strong.

An oversold RSI does not guarantee a rebound. In a strong downtrend, an ETF can remain oversold for an extended period.

📈 MACD — Is momentum turning bullish?

I would watch for the MACD line crossing above the signal line, especially when the histogram starts improving.

A bullish crossover near a support level can provide additional evidence that selling pressure is weakening. However, MACD can lag behind the actual price, so I would not use it alone.

🎯 Support and resistance — Where are buyers returning?

I would identify the previous swing low as a potential support area and the most recent breakdown level as potential resistance.

My preferred setup would be:

1. SOXL sells off sharply and approaches a meaningful support zone.

2. RSI begins recovering instead of continuing to make lower lows.

3. MACD starts improving or produces a bullish crossover.

4. Price forms a higher low or breaks above a recent short-term resistance level.

5. I enter with a predetermined stop-loss and position size.

I would avoid chasing the first green candle after a huge decline. A rebound can fail quickly if semiconductor stocks remain under pressure from inflation, interest rates or disappointing earnings.

⚠️ My rule: SOXL is for short-term trading, not a substitute for long-term investing. Its daily leverage and compounding effects can produce substantial losses when the market moves against me. The fund’s stated objective is approximately three times its benchmark’s daily return, not three times its long-term return.

🏦 5️⃣ TSMC: Why Its Earnings Matter to the Entire AI Industry

TSMC is one of the most important companies in the semiconductor supply chain because it manufactures advanced chips designed by other companies.

Nvidia designs AI accelerators, while AMD designs processors and accelerators. TSMC manufactures chips for customers that depend on its advanced production capabilities.

This means I pay attention to TSMC because its results can help me understand whether AI demand is translating into real orders and manufacturing revenue.

If AI leaders continue ordering advanced chips, TSMC can benefit from demand for manufacturing capacity and advanced packaging. If customers reduce orders or delay projects, the effects can spread throughout the semiconductor industry.

💡 What I want to learn from TSMC’s earnings:

* Is demand for advanced AI chips still growing?

* Are customers continuing to spend on AI infrastructure?

* Are manufacturing capacity and advanced packaging keeping up with demand?

* Are profit margins holding up despite higher operating and capital expenditure costs?

* Does management remain confident about future demand?

A company can report strong earnings and still see its share price fall if investors were expecting even better results. Therefore, I look at both the reported numbers and management’s forward guidance.

🇺🇸 What about US production, tariffs and supply chains?

TSMC is expanding its US manufacturing footprint, particularly in Arizona. This could help it serve American customers closer to where some of their products are designed and assembled.

Local manufacturing may reduce certain transportation distances, improve coordination with customers and diversify production away from a single geographic region.

It may also reduce exposure to some cross-border trade risks, depending on the product, its origin, applicable tariff rules and the final destination.

However, I would not assume that every chip produced in the United States is automatically exempt from tariffs or other trade restrictions. The actual treatment depends on the rules in force and the specific supply chain.

There is another important consideration: building and operating advanced semiconductor factories in the United States can be more expensive than producing chips in Taiwan. TSMC must balance the benefits of geographical diversification against construction, labour and operating costs.

For investors, the key question is whether additional US production can improve supply-chain resilience without putting too much pressure on profitability.

TSMC’s US expansion is substantial, but its global manufacturing footprint remains important to its business.

📈 6️⃣ QQQ: My Longer-Term Approach to AI and Technology

While SOXL is a trading instrument I would approach cautiously, QQQ is a different proposition for my longer-term portfolio.

QQQ tracks the Nasdaq-100 Index, which provides exposure to many of the largest non-financial companies listed on Nasdaq. It includes major technology and growth businesses, although it is not exclusively a technology ETF.

I see QQQ as a way to participate in the long-term development of AI, cloud computing, software, digital services and other growth industries without having to select every individual winner.

However, QQQ is still exposed to growth-stock valuations. If inflation remains elevated and interest rates rise, investors may be less willing to pay high valuations for earnings expected far into the future.

That can cause QQQ to fall even when its underlying companies continue to grow.

🐶 My QQQ plan is different from my SOXL plan:

* QQQ: Focus on long-term business growth, earnings, valuation and regular portfolio reviews.

* SOXL: Focus on short-term price action, technical confirmation, risk limits and disciplined exits.

* Individual semiconductor stocks: Evaluate company-specific earnings, competitive advantages and future demand.

I would not use a short-term SOXL trading signal to decide whether I should sell a long-term QQQ investment. They serve different purposes and have different risk profiles.

I also would not assume QQQ must recover quickly after every correction. If earnings growth weakens or valuations become excessive, a recovery can take longer than expected.

🔍 7️⃣ What Would Make Me More Bullish After a Semiconductor Sell-Off?

I would become more constructive if several things happened together.

First, TSMC would need to show that advanced-chip demand remains healthy. Second, AI customers would need to demonstrate that their infrastructure spending is translating into business growth or credible future revenue opportunities.

Third, I would look for semiconductor stocks to stabilise technically. Better RSI momentum, a constructive MACD crossover and a break above short-term resistance could help confirm that buyers are returning.

Finally, I would watch inflation and bond yields. If inflation begins easing, pressure on growth-stock valuations may decrease. If inflation remains hot and interest rates move higher, even companies with excellent earnings could experience further share-price volatility.

The distinction is important: strong company earnings can support a stock over time, but they do not guarantee a positive share price over the next few days or weeks.

🐶 8️⃣ My Final Take: Every Plunge Deserves an Investigation

I don’t believe every semiconductor sell-off means the AI boom is finished. But I also don’t believe every plunge should be bought automatically.

If earnings remain resilient, cash flow is healthy, AI spending continues and valuations become more reasonable, a correction may create an opportunity for long-term investors.

If I want to trade the volatility, SOXL offers leveraged exposure but demands strict risk management. I would wait for technical confirmation rather than buying simply because the ETF has fallen sharply.

If I want longer-term exposure to large growth companies, QQQ is a different option to evaluate. And if I want to understand the health of the AI manufacturing supply chain, TSMC is one of the companies I would study closely.

My investing principle is simple: price tells me what the market is doing today, earnings help me assess the business, and technical analysis helps me plan my entry and exit.

I want all three to work together before I commit more capital. Every plunge may present an opportunity, but my job is to distinguish a temporary market panic from a genuine deterioration in business fundamentals. 🐶📊

Disclaimer: This is educational market commentary, not a recommendation to buy or sell any security. SOXL’s leverage makes it especially risky for inexperienced traders.

Find out more here: SG61 Trading Arena for SGX Listed Securities!

Compete for MacBook Pro, iPhone Air, iPad Pro & more*$Direxion Daily Semiconductors Bull 3x Shares(SOXL)$  $Taiwan Semiconductor Manufacturing(TSM)$  $Invesco QQQ(QQQ)$  @TigerStars @Daily_Discussion @AI_FocusedTrader @Shernice軒嬣 2000 @MillionaireTiger @TigerEvents