SMH And SOXS ETF: Using The IT-Semis Correlation For Investing And Trading

Chetan Woodun profile picture
Chetan Woodun


  • The information technology sector represented here by VGT and semiconductors (semis) have a strong correlation, as this thesis will elaborate upon.
  • This linkage can be exploited, firstly for making a case for investment in SMH at the current juncture, and secondly, to trade SOXS.
  • In addition, there are the outlook for the semis industry as well as macroeconomics to consider.
  • In order to maximize the probability of gains, trading the highly leveraged ETF should be synchronized to the big tech earnings season which starts next week.
  • I also stress the risks involved based on my own experience covering and trading the bear ETF before.

Main microchip on the motherboard


There is a strong correlation between the IT (information technology) sector and semiconductors (semis) as shown by the five-year performance charts below. In this case, the ups and downs put in evidence the strong linkage between the price movements of the VanEck Semiconductor ETF (NASDAQ:

Data by YCharts

Digital Twin

Portfolio Composition (


SMH's Holdings (

Data by YCharts

This article was written by

Chetan Woodun profile picture
My aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I have also been a mediocre entrepreneur in real estate, and a farmer, and like to dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I regularly contribute peer reviews and opinions for enterprise tech and help needy families by providing sponsored work.As for Research, I started with Tech stocks before going Multi-Tech with Fintechs, Biotechs, and Cryptotechs.I have been investing for the last 25 years, initially in mutual funds where the "learned economists" would always advise you to "think long term". Got a lot of experience in the 2008/2009 downturn when I lost a lot. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best financial advisors.We live only once but can have many "investment lives" especially when investing in individual stocks.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

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