Since the 2009 stock market lows, investors have looked to the Semiconductor sector for strong returns and market leadership.
Just check out the performance numbers vs the broader stock market: Semiconductor ETF (SMH) +494% vs S&P 500 +262%.
With numbers that double those of the S&P 500, it’s fair to say that the Semiconductors have provided important leadership for this bull market.
And that leadership has become much more apparent (and “visual”) in the past 18-24 months. Just look at that rally and outperformance! See chart below.
Semiconductors (SMH) vs Broader Market (SPX) Performance Chart
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If you look closely at the chart above, you’ll note the recent downturn/pullback for SMH. That brings us to the importance of our next chart – a “monthly” bar chart that highlights why the Semiconductors have pulled back here.
Semiconductors Testing 2000 Highs
The Semiconductor ETF (SMH) recently tested its 2000 price highs (see points 1 & 2 on the chart below), before reversing lower to test uptrend price support (point 3). This action created a bearish reversal pattern and gave market bulls a strong reason to put SMH on their radar.