Semiconductors May Be Sending Stocks A Bullish Message
Chris Kimble | Oct 10, 2019 02:46PM ET
Sir John Templeton used to say that the four most dangerous words in investing are: “It’s Different This Time.”
Investors may want to keep a close eye on the SMH:S&P 500 ratio to see if the results will be different this time. This chart looks at the ratio between the two over the past 5 years, which traded sideways for nearly two years (2014-2016) before breaking out at (1). When the ratio broke out in 2016, the S&P 500 soon experienced a strong rally.
Turning to the current conditions, the ratio has traded sideways again for nearly the past two years as it tests the top of the range at (2).
Stock bulls would love to see a breakout at (2). But they'd receive negative news if the ratio peaks again at the top of this range.
If the ratio succeeds in breaking above the top of the range/resistance, will the results be different this time?
What that ratio does from now till year-end should send an important signal to the broad markets.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.