Buy the Dip in Semiconductors and Steel—But Hedge Against Oil's Middle East Jitters!

The market is stuck in a tug-of-war between trade truces and geopolitical firestorms. As US-China tariff talks inch toward a shaky compromise and Middle East tensions send oil prices spiking, this is the moment to buy the dip in semiconductor and steel stocks—while hedging against energy's volatility. Here's how to position your portfolio for the next leg of this rollercoaster ride.

The Trade Truce: A Green Light for Semiconductors?

The US-China framework deal isn't perfect, but it's a critical de-risking moment for tech. The removal of US export controls on semiconductor design software and equipment to China—along with a temporary pause on rare earth restrictions—could supercharge chipmakers like Intel (INTC) and AMD (AMD). These stocks have been beaten down on fears of trade wars, but the reality is this deal unblocks supply chains that were holding back both companies' growth.

Intel's shares have lagged the broader market by 20% since the start of 2025, even as its AI chip partnerships with Microsoft and Meta gain momentum. The semiconductor sector is trading at a 15% discount to its 5-year average P/E ratio—a screaming valuation opportunity if trade relations stabilize.

Action Alert: Buy Intel on dips below $30/share and AMD at $90/share or lower. Both have the scale to capitalize on China's reopening of tech imports—and the market's underestimation of their resilience.

Steel: Betting on the "Bad News" Already Priced In

Steel stocks like Nucor (NUE) have been crushed by fears of a global slowdown, but here's the twist: the 50% tariffs on imports are already baked into their valuations. While US steelmakers face headwinds from legal challenges (courts are still debating the legality of Trump's tariffs), the reality is these companies have strong pricing power in a constrained supply environment.

Nucor's revenue has held steady despite the tariff chaos, thanks to its vertical integration and cost discipline. Meanwhile, the UK's tariff carveout and Canada's supply bottlenecks are creating localized shortages that could push US steel prices higher. This stock is a contrarian's dream at its 52-week low of $65/share.

Action Alert: Load up on Nucor below $68/share. The market's panic over trade wars is overdone—these companies will thrive if the US avoids a full-blown steel glut.

The Middle East Wildcard: Why Energy is the New "Risk On" Trade

Now here's the catch: Middle East tensions are a ticking time bomb for oil prices. The partial evacuation of US military dependents from the region and Iran's saber-rattling have sent Brent crude to $69/barrel—a two-month high. OPEC+'s output hike plans could backfire if a supply disruption materializes, pushing prices toward $80/barrel by year-end.

This creates a dangerous inflationary loop: higher oil = higher costs for logistics, manufacturing, and consumers. The Fed's pause on rate hikes won't matter if inflation resurges.

Hedge Alert: Short the Energy Select Sector SPDR Fund (XLE) at $90/share or lower. Pair this with a long position in silver miners (e.g., Pan American Silver PAAS) to profit from the "green energy" pivot if oil spikes force a pivot back to renewables.

The Contrarian Playbook: Buy the Tech Dip, Short the Oil Spike

1. Buy Intel (INTC) at $30/share or below—its AI chip moat is underappreciated.
2. Buy AMD (AMD) at $90/share or below—its data center growth is unstoppable.
3. Buy Nucor (NUE) at $68/share or below—a diamond in the rough for US industrial revival.
4. Short XLE at $90/share or higher—oil's geopolitical risks are underpriced.

Final Word: Trade with the Truce, Hedge with the Tensions

This is a two-front market: one where trade optimism lifts tech and steel, and another where Middle East chaos fuels energy inflation. The key is to own the undervalued sectors while shielding yourself from the volatility.

Stay aggressive on the dips—just don't forget to hedge. The next big move is already in the making.

Disclosure: The author holds no positions in the stocks mentioned. This is not financial advice; consult a professional before making investments.