With large-cap tech gaining momentum, semiconductors have set the stage for a year-end rally.
The Equal-Weight Semiconductors ETF $XSD offers a valuable lens into the overall health and performance of this critically important subsector.
Unlike traditional cap-weighted benchmarks, XSD provides a much broader view of what’s going on with these stocks. And right now, it’s telling us everything is good with semis.
Currently, the ETF is testing the upper limits of a big basing pattern, following a prior breakout attempt that failed a few months ago.
Our volatility squeeze indicator is accelerating higher, suggesting a big move is brewing.
If XSD can hold above its prior cycle highs, it can only be a bullish development and a big plus for the broader market.
And if this is a valid breakout for XSD, it is probably only a matter of time until the cap-weighted indexes like SOX and SMH follow. I would expect to see the heavyweight leaders like Nvidia, Broadcom, and Taiwan Semi do the same.
And we’re positioning for it.
We just bought call options in Lam Research $LRCX as part of our Breakout Multiplier system.
