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Don't even try picking a bottom in these stocks: Trader

As chipmaker stocks sold off severely on Friday, one trader had some advice for those who may be looking for a bottom: Don't be a hero.

The S&P 500 semiconductor industry group has fallen almost 13 percent year to date. And according to Eddy Elfenbein of the Crossing Wall Street blog, investors shouldn't expect a turnaround anytime soon.

"It just doesn't look good for the semis right now. They're being squeezed on all sides," he said Friday on CNBC's "Power Lunch."

Elfenbein said chip stocks are facing pressure from faltering PC sales, a strong U.S. dollar and weak economies in Asia. Despite better-than-expected earnings reports from chipmakers such as NXP and Qorvo, Elfenbein said the outlook remains grim until those central conditions improve.

"Until that gets better, I think people ought to steer clear of the semiconductors," he said. "Don't be a hero, don't try to pick a bottom."

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Looking to the options market, Stacey Gilbert of Susquehanna said traders are continuing to bet on more pain for semiconductor companies.

"The sentiment continues to be pretty bearish here," Gilbert said Friday.

Specifically, Gilbert said she's seen at-the-money put buyers on shares of Texas Instruments and NVIDIA, which is more likely to indicate big traders placing outright bearish bets rather than merely hedging existing long positions.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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