This beaten-up group must rebound before Nasdaq can recover, investor Paul Meeks says 

Longtime investor Paul Meeks believes it could take months until the Nasdaq stages a sustainable comeback.

Meeks, who ran the world's biggest tech fund for Merrill Lynch during the dot-com boom and subsequent collapse, predicts the correction gripping the tech-heavy index will only get deeper due a particularly hard-hit group of stocks, which doesn't include the FANG names.

"Semiconductors, being such an important part of the tech sector, impacts the whole shebang. I actually think it's the biggest tell," he said Wednesday on CNBC's "Trading Nation." "Right now, we're in the midst of what we call an inventory correction. That means there are not only too many chips at the vendors themselves, but at their customers."

The semis began selling off this year before the Nasdaq. The VanEck Vectors Semiconductor ETF is down 11 percent over the past six months.

"I have an extra-large cash position right now," he said. "I am keeping powder dry. I'm not convinced that we're near the bottom in these [semi] names."

According to Meeks, investors will likely have to wait into the new year for more clarity on the chip glut.

"We've already been through quarterly results for these companies," Meeks said. "So, we can't see the inventory line on these balance sheets for another maybe 90 days."

Until he gets more guidance from semis, Meeks suggests he'll be staying mostly on the sidelines. He estimates that the Nasdaq sell-off is in its sixth or seventh inning.

"I don't think that we'll see a recovery before the end of 2018," he said.

His forecast may sound discouraging, but Meeks is confident tech will stage a strong rebound next year.

"You could have some semiconductor stocks go up double and triple from where they are trading now," Meeks said. "The biggest call in technology will be the semiconductor turn. The people who get that right in 2019 are going to make a load of money."

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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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