Arm Holdings (ARM) stock is up 194% this year. However, it has stalled and slipped since mid-June, and big investors are quietly selling. The reason is simple. Arm is the chip stock most exposed to rising interest rates.

The next test comes on July 14, when new inflation data is due. A hot reading would push the Federal Reserve closer to a rate hike. And Arm has the most to lose.

Big Money Started Leaving in Mid-June

The clearest warning comes from money flow. Chaikin Money Flow (CMF), a proxy for institutional buying, peaked at 0.37 around June 15 and has since fallen to 0.01. In plain terms, big buyers nearly vanished.

Note: Arm is based in the United Kingdom, but its shares trade in New York in US dollars, so Federal Reserve rate moves drive it like any American chip stock.

The timing is not random. Inflation hit 4.2% for the year on June 10, the hottest in three years. Days later, on June 17, the Federal Reserve held rates but signaled it may raise them. More so, institutional money began leaving in the run-up to the June 17 Fed meeting.

Since then, markets have gone back to pricing hikes. Robin Brooks, senior fellow at the Brookings Institution and former chief economist at the IIF, says one number will set the tone.

Here is why that hits Arm (ARM) hardest. A hot inflation report makes the Fed more likely to raise interest rates. Higher rates make profits expected years from now worth less today. Arm is the priciest big chip stock, and most of its profits sit far in the future. Investors are paying mainly for growth from its AI chip designs in the coming years, not for the money it makes today.

That makes Arm the most rate-sensitive name in its sector. Its price tends to move in the opposite direction of interest rates, and by more than any other big chip stock.

So it falls more than the average chip when rate fears rise. When a major bank warned of up to three more hikes on June 23, Arm dropped over 10% in a day.

Options Traders Turned Defensive Too

The options market flashed the same signal. Arm’s put-call ratio compares bets on a fall against bets on a rise. On June 15, with Arm near $412, the volume ratio was 0.51, so traders still bought more calls than puts.

Yet the open interest ratio was already 1.22, meaning longer-standing bets leaned bearish.

By July 1, with Arm near $337, both had turned bearish. The volume ratio jumped to 1.75, and open interest sat at 1.17.

In short, traders went from hopeful to defensive as rate-hike talk grew louder. The ARM price chart tells the same story.

The ARM Stock Chart Confirms the Warning

The rally was already running on empty. From May 6 to June 30, Arm rose, but the buying volume behind each move kept shrinking.

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That weakness stalled Arm at about $362. The stock now trades near $337, just under the $340 level it needs to hold.

If it breaks lower, $303, then $298, come into view. Far deeper support sits near $198 if the selling speeds up. To turn things around, Arm must reclaim $362 with strong buying, which would pull money flow back up. The real line, though, is $399 (the $400 zone).

Above $400, ARM regains genuine strength. Below it, with a hot July 14 report threatening another rate scare, every bounce is likely to be sold. The $400 mark separates a fresh leg higher from more selling into every rally.

Источник: BeInCrypto