#SMH Goldman Prime Brokerage data shows that hedge funds’ net open exposure to a broad AI stock basket that includes companies such as AMD, Micron, and Nvidia has already fallen to its lowest level this year. Previously, hedge funds had sold technology hardware and semiconductor assets for four straight weeks.

This suggests that a significant portion of the most dangerous selling pressure earlier on—highly leveraged longs being forced to reduce positions—has already been released.

From the perspective of trading structure, a stock is usually at its most dangerous not when everyone has already cut positions, but when everyone is still fully allocated and the decline has just begun. It’s clear that this stage has already been passed.

Yesterday, chip stocks saw clear increased volume. The Philadelphia Semiconductor Index fell as much as 5.7% at one point during the session, then briefly turned positive, and ultimately closed down 1.6%. This is a massive intraday long lower wick, indicating that after the index entered a bear market, selling did not continue to accelerate in a straight line, but instead showed clear buy-side support.

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