Although the semiconductor over software theme has persisted since the stock market low in April, there is no sign of letting up as investors wasted no time on the first trading day of the year, accelerating this trend.
Semiconductors opened the new year with a bang, surging more than 4%, while software stocks were clobbered, falling nearly 3%. The resulting 7.07% spread between the iShares Semiconductor ETF and the iShares Expanded Software ETF is the largest on record, eclipsing the previous extreme reached the day after the Liberation Day low.
Unlike the Dot-com era, when the internet’s growth lifted nearly every company in the sector, AI is producing clear winners and losers within technology, making today’s investment landscape considerably more challenging.
Our dual trend system, which integrates relative strength analysis, generated a sell signal on the iShares Expanded Tech Software ETF nearly two months ago; since that signal, the ETF has declined 8.4% and underperformed the S&P 500 by 9.7%.
Comparing securities’ performance through relative strength allows investors to pinpoint leaders and laggards, capturing robust trends while avoiding weak ones.
Each Chart of the Week highlights a theme, idea, or historic event that stood out to us. If you find it interesting, feel free to share it with friends or colleagues.
Visit www.tpmarketresearch.com to learn more about our research offering.
