The AI trade, a key driver of market growth, has faced a notable downturn, with the AIQ ETF dropping nearly 19% since its peak last month. Technical indicators, such as the weekly MACD signaling a 'sell' and lower stochastics, suggest that the correction may continue.
AIQ's top holdings, including major players like SK Hynix, Micron, AMD, Apple, and NVIDIA, highlight its importance as a proxy for the broader AI market. Although the ETF is currently oversold and testing support levels, any near-term rebound is viewed as a temporary interruption rather than a reversal of the downtrend.
Resistance is noted around the $64-$65 range, while a breakdown below $57 could lead to further declines towards $54. The relative performance of AIQ against the S&P 500 also indicates a shift in market leadership away from AI stocks, reinforcing the expectation of continued underperformance in the sector this summer.
Investors are advised to consider reducing exposure during any short-term strength until momentum shows signs of improvement