Semiconductor Stocks Hit New Highs
Semiconductor stocks did exceptionally well this past week. In fact, the benchmark Philadelphia Semiconductor Index (SOX) gained well over 5% and hit new highs in the process. It was the best week for the index since the first full week of January.
Semiconductor Stocks Outperform S&P 500, Nasdaq
Q4 2018 was clearly rough on semiconductor stocks, as it was on equity markets as a whole. But since the beginning of this year, the SOX has surged a full 23% (as of Friday’s market close). This compares very favorably against the Nasdaq Composite’s +18% and the S&P 500’s +14%. And unlike the S&P 500, the SOX has now essentially pared all of its losses from the disastrous fourth quarter of last year.
Semiconductor ETF (SMH) Surges to 5-Month High
The VanEck Vectors Semiconductor ETF (SMH) is the most heavily-traded grouping of public U.S. semiconductor companies in an exchange-traded fund. It includes such key holdings as Intel (INTC), Nvidia (NVDA), Broadcom (AVGO), Advanced Micro Devices (AMD), and Micron Technology (MU). SMH just hit a new 5-month high on Friday, breaking above the most recent high of late February.
Fueling this rise, individual semiconductor companies have been on the upswing of late, especially leaders like Intel and Nvidia. Broadcom jumped over 8% on Friday after its earnings release, further boosting SMH.
The semiconductor ETF has not only broken out to a new multi-month high. It has also tentatively broken out above a key downtrend resistance line connecting three consecutive highs going back almost exactly one year to the March 2018 highs.
If the overall market cooperates in the week ahead, the breakout in semiconductor stocks could boost the SMH ETF towards its next major technical target around the 110.00 resistance level.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Market Analyst at The Technicals
A veteran global macro trader/analyst, Bart focuses on major market moves in currencies, commodities, fixed income, and global equity indexes. Bart stresses inter-market correlations and dynamics while keeping a close eye on risk. He has published countless market analysis pieces and has been a guest expert for a variety of major financial media. Contact Bart