Lynx Equity Strategies analyst Jahanara Nissar thinks it's time to step back into Semis.

After saying all month to stay away from Semis due to a) the M&A premium built into stock valuations, and b) the unusually strong move up in MU due to sell-side crowding-in, the analyst said it is now time to buy the dip.

Nissar notes the Sox closed last week below the level when the CFIUS shadow over the AVGO/QCOM deal first appeared on Feb 27th, and when M&A premium in rest of semis first began to creep in. It is perhaps now safe to say the M&A premium in large cap (> ~$10B) semi stocks related to acquisition by AVGO has now melted away.

The second reason for Semi sell-off along with the rest of the Tech sector was due to China trade fears. "Just as with the rest of the market, perhaps these fears have maxed out in the near term," she commented. Nissar said it is also significant that the US Treasury has included US semiconductor sales among list of sectors it wishes China to increase purchases."

"Risk-reward now appears to favor getting back into semis," she concludes.

Related EFTs:

Market Vectors Semiconductor ETF (NYSE: SMH)