Know Your Holdings:

The semiconductors have been a big reason for the overall strength of the technology space and July as we mentioned recently still shows strength over the last 4 years, but notice August and September are the only back-to-back months to produce negative returns with all of the September’s dating back to 2020 CLOSING lower than where they started with an average loss of 7%. Now looking at the composition of the two largest semi ETF’s, the SMH and the SOXX the former carries an NVDA weighting of 20%, more than double that of the SOXX at just below 9%. If one is a big NVDA bull it makes complete sense to overweight the SMH against the SOXX. Looking at the stats the SMH has advanced 49% YTD and 71% over the last one-year period compared to the SOXX higher by 28% and 46% over the same timeframe. The chart below of the SMH, on the lower panel of the graph demonstrates this. The back-to-back dojis recorded by the SMH are interesting and remember they often speak to at least fatigue, or a change in the prevailing trend, so investors should be ready to raise cash in my opinion, especially after the big reversal on 6/20 with the bearish engulfing candle. 

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