Semiconductor ETF Has Failed to Break Out

25 มิ.ย. 2020

One of the biggest stories in the last month has been the breakout in the Nasdaq-100. But the Market Vectors Semiconductor ETF has failed to join the breakout.

It’s not a surprise because chips are economically sensitive and struggle when manufacturing slows. That’s happened now.

SMH’s lack of breakout shows weak relative strength and fundamentals. That could give bears more of a reason to expect downside if selling spreads in the broader market.

It also creates a potential risk-management zone for traders taking bearish positions.

Finally, the relative weakness in chips focuses attention on Nasdaq stocks that have actually broken out – like software and e-commerce. Traders may want to expect more strength in those groups.

SMH might not be a short yet, and it might still break out if the S&P 500 holds 3,000. But if the opposite happens and volatility picks back up in July, this could be a corner of technology where the bears will be more active.