Semiconductor stocks were the clear leaders in the AI-driven cyclical bull market of 2023 and 2024. The S & P 500 Semiconductor Index generated impressive returns of approximately 98% and 75% in 2023 and 2024, respectively. However, the same index is down over 17% year to date, making semiconductors the third-worst performing industry group in the S & P 500. A weekly chart of the VanEck Semiconductor ETF (SMH) shows a significant loss of momentum since the middle of last year. This is visually evident in the declining 200-day, or 40-week, moving average (MA).Intermediate-term momentum has turned negative per the weekly MACD indicator in a clear shift from the past two years. Support from the cloud model, denoted by the shaded area on the chart, has been broken. This affirms that the cyclical uptrend is no longer intact and increases risk of a prolonged correction for semiconductor stocks. While the long-term outlook for semiconductor stocks has deteriorated, they are reacting positively to oversold conditions, which may produce a better selling opportunity in the coming weeks. SMH has an upturn in its weekly stochastics from oversold territory, and the daily MACD has a new “buy” signal that suggests a relief rally can extend in the near term. The 200-day MA, which served as support in the second half of 2024, is now resistance near $242. The ratio of SMH to the SPX shows a clear loss of long-term upside momentum, completing a topping pattern like SMH in price terms. Semiconductor stocks were a source of upside leadership from 2023 through mid-2024, and they have since become a source of downside leadership. We find that when semiconductors lose relative strength, it is a sign of a more difficult market environment more broadly, like 2022. For weekly updates on SMH and dozens of ETFs, please contact us for information about our ETF Navigator report. —Katie Stockton with Will Tamplin Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited! DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
