If there’s one group that deserves our full attention right now, it’s semiconductors.
These tiny chips are the backbone of everything driving the economy — from AI and autos to data centers, defense, and consumer tech.
When semiconductors do well, it’s hard for stocks not to follow.
And right now? They’re sitting at a critical spot on the chart.
The cap-weighted index $SMH is holding just above its former highs from earlier this year, but only barely. There hasn’t been any real follow-through — at least not yet.
And when we look at the equal-weight version of the index $XSD, we’re seeing a similar story. It’s pressing up against those same prior highs, trying to break out — but still coiling.
Any rejection from here would be a serious red flag for risk assets.
You never want to see your best players get hit — and semiconductors are by far the strongest and most important group out there.
You want them on the field, leading the charge, pushing higher, and outpacing their peers — just as they have been doing.
Just take a look at how semis behave when overlaid with the S&P 500 — their moves often foreshadow what’s coming next.
Semiconductors have consistently acted as a leading indicator for the broader market in previous cycles.
Whether you look back at 2009, 2018, or even earlier this year, semis moved first — and the broader market followed.
That’s exactly why this moment is so important to watch closely.
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