Over the past two decades, it’s fair to say that semiconductor stocks have been an essential part of the technology space.
This is true from an investing and economic perspective.
Today’s chart looks at a long-term view of the ratio of the VanEck Semiconductor ETF (NASDAQ:SMH) to the NASDAQ 100 ETF to highlight semiconductor’s relative performance—and why it’s important to watch right now.
As you can see, semiconductors’ big disconnect and subsequential decline lower occurred during the financial crisis of 2008. However, it led to under-performance all the way through 2015. This was also a period of economic underperformance.
Since then, semiconductors have shown leadership in outperforming the NASDAQ 100, which has led to a rally back to (and briefly above) the key financial crisis breakdown area.
Make Or Break Message To Tech And Broad Markets?
It seems like an important area for investors (and consumers) to watch. A breakout here = bullish for stocks/economy, while a breakdown here = bearish for stocks/economy.