Chipmakers are overextended. Where Josh Brown is picking his spots in the sector

(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Let's not bury the lede. The semiconductor ETF (SMH) is now almost 50% above its 200-day moving average and an RSI of 85. If you are placing buy orders for semi stocks today, my god I hope you're managing risk. You can do this through tight stops or small trade size. These are the most extended stocks in the most extended industry group in the entire global stock market. At this point, the fundamental drivers are incredibly well understood. We're coasting on pure momentum and fear of missing out and that's rarely a great entry point, I don't care how good the story is. It's not that I don't think you can make more money in the chips from here. I would just be a lot more selective and deliberate about what you're buying, how much of it and whether or not your expectations are reasonable. Because when this thing reverses - and, of course, it will — you may not be able to behave calmly and withstand the regret. We've shown you some monster winners in the chip space over the last year, from Lam to AMAT, Intel to KLA. Semis and Semi Equipment are the most HALO of all the technology industry groups and, in part, this is why they've become so popular among investors. …