Hedgeye CEO Keith McCullough Warns Semiconductor Rally Is Driven by Mechanical Buying and Faces Fragile...

Hedgeye CEO Keith McCullough cautioned on The Macro Show that the recent semiconductor rally is more fragile than it appears, noting that the gains have been driven by mechanical buying rather than fundamental conviction.
According to McCullough, as volatility moved off its lows, volatility-control funds bought the index, carrying heavy-weight semiconductor stocks higher. He warned that this flow risks reversing if one-month volatility breaks back above three-month and Commodity Trading Advisors (CTAs) begin selling—a shift indicated by morning Tier 1 Alpha reviews.
On the macroeconomic front, McCullough criticized the Federal Reserve's path, arguing that a rate hike arriving at the top of the Risk Range risks backfiring. He stated that the hike itself will act as a catalyst by flattening and inverting the yield curve, creating a messy outcome for markets.