SEMICONDUCTOR STOCKS ARE ON SALE
From a “relative value” perspective, semiconductor chip stocks are as cheap right now as they have been in two years compared to the S&P 500.
Today’s chart compares the action in the Market Vectors Semiconductor Fund (SMH) to the action in the S&P 500.
A rising chart indicates semiconductor stocks are outperforming the broad stock market.
The last time chip stocks got this cheap was in September 2010.
The sector rallied 50% over the following four months.
That doubled the performance of the S&P 500 during the same period.
Yesterday, I told readers the stock market should cap off a strong 2012 with a year-end rally.
In that case, semiconductor stocks need to play catch-up. And given how oversold the sector is relative to the broad stock market, that game should start soon.
– Jeff Clark
Source: Market Notes