Rotation has been the story. 

For much of the summer, the indices did nothing but churn. 

Hardly any progress was made. 

The S&P 500 (SPY) is trading just 1% above its June highs. The Invesco QQQ Trust (QQQ) hasn’t set an all-time high since early June. 

But this doesn’t mean it’s been a dull market. Quite the opposite. Below the surface, there’s been a ton of movement. 

Biotech, energy, crypto, and software stocks have all taken their turns leading the market. 

This is a good thing. Rotation is the lifeblood of bull markets. Without it, uptrends run out of steam. 

But this constant rotation hasn’t been enough to ignite a powerful rally. What’s been missing is technology stocks, specifically semiconductors.

The VanEck Semiconductor ETF (SMH) hasn’t set a high since late June. It’s currently trading 14% below that high water mark.

That’s an issue. Semiconductors are the single most important industry market. The group includes the world’s largest stock, Nvidia (NVDA), which is currently worth more than $5.5 trillion.

It also includes giants Broadcom (AVGO), Taiwan Semiconductor (TSM), and Micron Technology (MU).

When these huge stocks climb, they can pull the market higher. 

Semiconductors are also central to the artificial intelligence (AI) infrastructure buildout theme... the defining narrative of this bull market. In other words, they’re a good measure of risk appetite. 

Unfortunately for investors, semis haven’t been participating… until recently.

Last week, Nvidia gained nearly 6%. It recorded its highest weekly close ever on Friday. That alone is encouraging. However, we also saw strong moves in other leading AI CapEx names.

Nebius Group NV (NBIS) gained 8% last week. Bloom Energy Corp. (BE) rallied 20%. At the same time, Micron and SanDisk Corp. (SNDK) finished the week very strong.

To be fair, SMH has yet to reclaim its 50-day moving average. But with the leaders showing the way, I expect that to change soon.

This is a very bullish development for both tech and the broader market. And it’s a big reason why we’ve added three technology stocks to the RiskHedge Live portfolio in the past week.

Justin Spittler

Director of Trading, RiskHedge

PS: Did you know my friend and colleague Stephen McBride just published his first book, Disruption Investing? In it, he shares the framework to multiply your wealth in disruptor stocks and much more, including compelling stories, real-world examples, and practical investing lessons. If you’re interested, it’s available now for pre-order for only $2.99. Go here for details.