tech
Charts Show Semiconductor Stocks Vulnerable to Big Pullback, Says Katie Stockton
The founder of Fairlead Strategies takes a look at the SMH and Taiwan Semiconductor charts.
TL;DR
- Semiconductor stocks have outperformed the S&P 500 in Q1 but are showing signs of vulnerability.
- Technical analysis suggests a nine-month corrective phase for semiconductor stocks.
- Long-term upside momentum for SMH has waned, indicated by a downtick in the monthly MACD histogram.
- The ratio of SMH to the SPX shows a loss of intermediate-term momentum, suggesting semiconductors will be out of favor.
- Taiwan Semiconductor Manufacturing (TSM) has broken down below its daily cloud model, indicating a bearish intermediate-term shift.
- Deterioration in long-term indicators for TSM suggests headwinds for the rest of the year.
- Semiconductor stocks tend to lead market trends, so their loss of relative strength is a bearish development for major indices.