tech
January 22, 2026
Charts point to rotation to chips from software inside the technology universe
The key question now is how much worse can it get for software when areas like semiconductors are pushing to new all-time highs.
TL;DR
- Market rotation is occurring within the technology sector, specifically between semiconductors and software.
- The VanEck Semiconductor ETF (SMH) has reached new all-time highs, showing a performance similar to the 2020-2021 period.
- The IGV software ETF has fallen to its lowest level since late April 2025, exhibiting bearish chart patterns.
- The divergence between SMH and IGV is notable, with SMH breaking out and IGV breaking down.
- The relative strength ratio of IGV to SMH has reached its lowest point ever, indicating extreme underperformance of software.
- Despite the current trend, a mean-reverting bounce in software is anticipated due to the severity of the recent decline.
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