The charts show semiconductor stocks are vulnerable to a big pullback, says Katie Stockton

Semiconductor stocks have been a pocket of strength within the technology sector in Q1, with the VanEck Semiconductor ETF (SMH) outperforming the S & P 500 Index by around 7 percentage points year to date. However, our work suggests semiconductor stocks are vulnerable to a period of downside leadership in the short term and potentially the long term. SMH’s secular uptrend shows signs of long-term upside exhaustion per Tom DeMark’s TD Combo model, supporting a nine-month corrective phase. The past two “sell” signals from this model were timely indications of cyclical corrections in late 2021 and mid-2024. Long-term upside momentum…