Stout Semiconductors:

The Nasdaq seems to be getting magnetically pulled to the very round 9000, now less than 1% from the very round figure, and the semis are a big reason for it. The ratio chart below comparing the semiconductors to software, shows just how strong they have done relative to software. Of course in absolute terms, both have done very well in 2019, both up better than 40% (only to be outdone by the computer hardware arena in tech sub sectors with SYNA AAPL ROKU and TECD to name a few). The SMH rose 2.6% this week, AFTER last weeks advance of 4.4%, excellent follow through, and let’s give software credit where it is due. The IGV which broke above a cup base pivot of 230.97 in late November, looked to be a bull trap, but it is now back above that trigger. I still prefer semis of software as the SMH trades much tighter, whereas the IGV trades very wide and loose, hallmark bearish traits. On a seasonality basis the SMH looks ready for higher prices, as the last 5 years the month of February is a perfect 100% in CLOSING above where the ETF started it. Advantage semiconductors, to use a tennis reference.

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