Investors in semiconductor stocks have been having a great deal of trouble deciding what comes next for the share prices of companies that compete in this important sector of the economy. We have been short-term bearish and long-term bullish on these stocks. More specifically, we have been looking for a selloff in SMH, the Semiconductor ETF, that brings some fear into the bulls that were late to the party. At the end of that move, we would be looking for those traders to be washed out, setting the stage for a slingshot move that would take prices to new all-time highs.
Frustrating both the bulls and the bears, the price of SMH has really gone nowhere this year. We see two clear patterns with the potential to take this EFT sharply higher or sharply lower. As frustrating as this may seem, we think we are close to the point where investors will tip their hand on where they will take the price of semiconductor stocks next.
