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November 20, 2024

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A Tale of Two Semiconductor ETFs – Why is SMH holding up better than SOXX?

4 Mins Read

Even though the iShares Semiconductor ETF (SMH) and the VanEck Semiconductor ETF (SOXX) have many similarities, there are some big differences in their component weightings and performance. Namely, SMH allows more concentration than SOXX and SMH is holding up better than SOXX. SOXX already broke down on the price chart and SMH is at a critical juncture as its biggest component reports earnings this week.

SOXX) and SMH are the two largest semiconductor ETFs by AUM (assets under management). However, as I learned from this video at nAnalyze, their weighing rules are very different. In particular, SOXX caps the weighting of the top five stocks at 8% each and rebalances. SMH, on the other hand, caps the weight of the top three at 20% each and then rebalances. This higher threshold allows more room for a momentum run. It is little surprise that the top three holdings in SMH are Nvidia (23.66%), Taiwan Semiconductor (13.2%) and Broadcom (7.71%). The top three holding for SOXX are Nvidia (10.12%), Broadcom (8.77%) and Advanced Micro Devices (8%).

The PerfChart below shows the one-month percentage change for ten semiconductor stocks. It is a mixed bag with four up and six down. Nvidia (red bar) is up 1.5%, two are down double digits (AMD and Micron) and only one is up double digits (Marvell). Short-term, it has been a rough ride for the group.

The next chart shows SOXX breaking wedge support and its 200-day SMA with a sharp decline on October 31st. SOXX rebounded back into the wedge with a three-day election bounce and then fell below its late October low. This means the wedge break is in play with the first target zone in the 195 area. A close above 235 would call for a re-evaluation.  The indicator window shows relative performance using the  SOXX/RSP ratio  (SOXX divided by the S&P 500 EW ETF (RSP)). This ratio has been below its 200-day SMA since late August, which means SOXX has been underperforming for around three months.

What is the significance of a rising wedge? A rising wedge is a bearish continuation pattern that marks a counter-trend bounce after a trend-changing decline. SOXX fell around 25% from mid July to early August and then retraced around 61.8% with the rising wedge to 240. Both the pattern and the retracement amount are typical for counter-trend bounces. The wedge break in October reversed the medium-term uptrend and signaled a continuation of the July-August decline. A 25% decline from the wedge high would target a move to the 180 area.

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The next chart shows SMH with a rising wedge, but the ETF has yet to break the October low (235) or the 200-day SMA. SMH did break the lower line of the wedge with a decline last week. Also notice that SMH is trading below the level it was trading at before the election. SMH is at a make or break level with Nvidia (NVDA) set to report earnings on Wednesday after the close. SMH stays bullish as long as 235 holds. A break would confirm the wedge and target a move to the 200 area.  

Stay on the right side of the trend with our weekly reports and videos. Our robust top-down approach started with broad market analysis to set the overall tone. We then drill to down to find ETFs and stocks with bullish setups within long-term uptrends.

Highlights from Recent Weekly Reports/Videos:

  • S&P 500 breadth remains strong and Nasdaq 100 breadth remains strong enough, but Nasdaq 100 is lagging because a third of its stocks are in long-term downtrends.
  • Fintech, Cybersecurity, Software and Cloud Computer ETFs were leading before the election surge and became very extended with the election surge. Time for some patience.
  • The Gold ETF became oversold for the first time this year.
  • Copper, Base Metals and Copper Miners failed hold their breakouts as they got hit post election.
  • The 10-yr Treasury Yield is on the rise as TLT moves sharply lower. What is the market telling us?

Click here to learn more and get two bonus reports!

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In World news

Doctors Without Borders halts operations in Haiti’s capital, citing police threats

3 Mins Read

A vital humanitarian organization said it will suspend activities in Haiti’s capital on Wednesday following a “series of threats” by local police, in a move that threatens to bring a further deterioration of conditions in the Caribbean nation that has struggled for years with gang warfare and political turmoil.

Doctors Without Borders, also known as Médecins Sans Frontières (MSF), accused authorities of repeatedly stopping its vehicles and threatening its staff with violence, including death and rape.

Following that attack, the organization said it faced four additional encounters with police.

“This series of incidents have left us with no choice but to suspend our activities in Port-au-Prince,” MSF said in a statement.

In recent years, police, civilian vigilante groups and even rival gangs in the lawless capital have been repeatedly accused by doctors and medical staff of breaking into health care facilities where they suspect wounded gang members to be seeking treatment.

“As MSF, we accept working in conditions of insecurity, but when even law enforcement becomes a direct threat, we have no choice but to suspend admissions of patients in Port-au-Prince until the conditions are met for us to resume,” MSF head of mission Christophe Garnier said.

MSF said it will stop admitting and transferring patients to its five medical facilities in the Haitian capital from Wednesday, impacting thousands of people in need of treatment.

“MSF provides care to everyone on the basis of medical needs alone. Each week on average in the Port-au-Prince metropolitan area, MSF provides care to more than 1,100 patients on an outpatient basis, 54 children with emergency conditions, and more than 80 new survivors of sexual and gender-based violence,” the organization said in a statement.

Brutal gang violence in the capital has resulted in the kidnappings of hundreds of people, and the displacement of hundreds of thousands of Haitians from their homes.

MSF is the latest international group to halt operations in the Caribbean nation.

Last week, US-based airlines suspended flights to Haiti after three of their jets were struck by bullets while flying over Port-au-Prince. Haiti’s transitional presidential council blamed armed gangs for the gunfire that struck one of the flights, accusing them of aiming “to isolate our country on the international stage.”

Last month, a United Nations helicopter was also hit by bullets while flying over Port-au-Prince. And in a separate incident in October, gangs targeted US Embassy vehicles with gunfire, later prompting the evacuation of 20 embassy staff.

In late February and early March, coordinated gang attacks forced the closure of both the airport and main seaport in the Haitian capital, choking off vital supplies of food and humanitarian aid to the Caribbean nation.

This post appeared first on cnn.com

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In Business

Dental supply stock surges on RFK’s anti-fluoride stance, activist involvement

3 Mins Read

Dental care supplier Henry Schein advanced in Monday trading as investors bet that Robert F. Kennedy Jr., President-elect Donald Trump’s pick for Health and Human Services secretary, could recommend removing fluoride from the U.S. water system, a move that would lead to a boom in dental visits.

Shares of Henry Schein shares jumped nearly 5%, on track for its best day since July. Fellow dental product makers Dentsply Sirona and Envista also edged higher in the session.

Monday’s moves come as investors ready for public health changes under a second Trump administration. Kennedy posted on X before the presidential election this month that a “Trump White House will advise all U.S. water systems to remove fluoride from public water.”

Fluoride has long been shown as an effective method for fighting cavities. But the mineral has found itself at the center of a nationwide fight that’s led some local communities to end programs centered on its insertion into public water.

While Kennedy will need to win Senate approval to take the job, market participants are already zeroing in on a group of stocks that make dental hygiene products as potential beneficiaries of his policies. That’s because taking fluoride out of water would actually put the tooth cleaning industry in higher demand as consumers look elsewhere to fight cavities, according to firm Gordon Haskett.

“The thought here is RFK will bring to HHS a voice that is in favor of reducing, or eliminating, the amount of fluoridation that is added to drinking water,” Don Bilson, Gordon Haskett’s head of event-driven research, told clients in a Monday note. “This will, in turn, lead to an acceleration of tooth decay and more dental visits.”

Given this, Henry Schein and other stocks in the space offer a bright spot within a sector that has largely struggled since the election. The Health Care Select Sector SPDR Fund (XLV) has tumbled around 3.5% in November, putting it on track for its first three-month losing steak since last year. By comparison, the broad S&P 500 has climbed more than 3% in the month.

Gordon Haskett’s Bilson also pointed out that dental stocks were some of the few “spared” health-focused equities as investors responded to the announcement of Kennedy’s nomination last week. Pharmaceutical names were under pressure given Kennedy’s reputation as a vaccine skeptic, while processed food stocks took a hit as traders geared up for increased scrutiny of so-called junk food.

“It caused widespread selling across the healthcare landscape,” Bilson said of the decision to select Kennedy. “Drugmakers, contract research organizations, and health insurers all felt the quake. Rather than stop there, the damage spilled into packaged foods. And advertising.”

While the market appears to be moving on Kennedy’s nomination, Bilson said that regulatory changes would likely take years to come into effect. He also noted that drinking water should fall more under the Environmental Protection Agency than Health and Human Services.

This post appeared first on NBC NEWS

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