2023-04-28 09:20:01 ET
Semiconductor stocks are looking at a technical breakdown that is casting a shadow on the broader market, according to BTIG technical strategist Jonathan Krinsky.
On Thursday, the equal-weighted semiconductor ETF ( NYSEARCA: XSD ) fell 3.35% while the Nasdaq 100 ( QQQ ) rallied 2.7%.
The difference of more than 600 basis points in moves of XSD vs. QQQ was the worst 1-day performance since November 2008, Krinsky wrote in a note.
"The XSD itself has broken below its 200 DMA, and the SMH ( SMH ) has definitively broken its uptrend from the Oct. lows," he said. "While there continues to be some internal rotation, a full-fledged breakdown in semis is hard to argue as being bullish."
"We continue to be cautious here with internal breadth much weaker than the broad indices suggest, and expect the cap-weighted indices to continue moving lower in the weeks ahead," Krinsky added.
"By now the breadth picture is pretty widely known," he said. "What's amazing, however, is just how consistently breadth drops off as you go down the market cap scale."
From the Oct. 12 low, the return for to six components (equal weighted) are:
- Nasdaq 100 ( NDX ) +45%
- S&P 500 ( SP500 ) ( SPY ) +14%
- S&P Midcap 400 ( MDY ) +8%
- Russell 2000 ( RTY ) ( IWM ) +3%
- iShares Microcap ( IWC ) -3%
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For further details see:
Breakdown in chip stocks makes the bull case tougher - BTIG