The breadth warning has become price confirmation. This leg of the semiconductor bull is over — not the structural story, the parabola.
On Tuesday, 02 June I wrote that the troops were leaving before the generals — arguing for a short-term top in semiconductors. The signal was XSD, the equal-weight semiconductor ETF, which had stopped confirming the mega-cap-led advance while SMH kept climbing.
That warning has now turned into price confirmation.
Figure 1. XSD — the equal-weight semis — −7.12% to 598.45, breaking the channel off the March low. Support at ~579, then ~524. Source: Barchart.
The channel has broken
XSD is breaking down hard today, testing — likely breaking — the steep upward channel in place since the late-March low. Last 598.45, down −7.12% on the session. If that break holds into the close, the April–June leg of the second-tier semiconductor bull should be treated as over.
And the generals are no longer holding the line. SMH — the cap-weighted complex carried by the mega-caps — is down −5.38%, now testing its own April-low trendline. SMHX, the fabless basket, −5.99%. The Tier-1 names that carried the advance have started to follow the second tier down.
Figure 2. SMH — the cap-weighted generals — −5.38% to 593.77, now testing its own April-low trendline. Source: TradingView.
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