Semiconductor ETF Poised For Breakout

VanEck Vectors Semiconductor ETF (SMH, daily) looks like it's forming a pattern. You have a number of strong stocks in the space including Nvidia that we featured on Monday. But they aren't all participating.

Video Transcript

- Finally, let's take a look. Boy, we're talking talk a lot about semiconductors. As semiconductors goes, so goes the NASDAQ. But let's take a look at, I think it was SMH we wanted to look at.

- Yeah. And actually, I think there were a number of semiconductors that were actually showing more strength relative to the NASDAQ composite for a while. I mean, you had stocks like AMAT, Applied Materials, that was really showing a lot of strength versus the NASDAQ.

But as a group, now that the NASDAQ is kind of getting itself out of that corrective phase that it was in at the end of February and most of March, this is starting to look a lot better. And you know, it's formed a pattern here. So it's come right back up to the highs.

Now it's kind of trickled off a little bit, kind of forming that handle action. So this will set up to potentially go again. And it has a lot of different ways you could play this. If you wanted to go deeper dive into some of the names, they're not all created equal.

You have some like Nvidia that we mentioned on stock market today on Monday that have been looking really strong. AMAT that was a little bit earlier of a move. But there's a lot of strength in this group. Not all of them are participating, but SMH kind of gives you enough of a blanket around the semiconductor industries that you're going to be able to participate with those winners as well.

And then, you also have other options in terms of if you wanted to juice that up. There's leverage ETFs that you could use. USD has the proshares that gives you a 2x on the semiconductor move of the US Dow Jones Semiconductor Index. And then, you also have SOXL which is a 3x on the middle of the semiconductor industry.

So if you wanted a little bit more juice to the performance. And if this does break out, USD already looks like it did break out today. But those are some other ways that you could play this space.

- Very interesting to see. The semiconductor stocks and semiconductor ETFs setting up with the NASDAQ just off an all time high and possibly poised for a breakout itself.