Over the past decade, I have written a lot about the importance of following the technology sector as a leading indicator of the health of the market. And, in particular, semiconductors.
Why? Because the semiconductor sector has been an important leader of the bull market since the 2009 low.
And, once again, it appears that the Semis may be trying to tell the market something important.
Today, we revisit the monthly chart of the VanEck Semiconductor ETF (NASDAQ:SMH). As you can see, the Semis have been in a strong up-trend. But late last year, the Semis tipped off the market that something was wrong and began heading lower.
This sell-off brought SMH back down to its six-year rising support before reversing higher last month. This reversal is seeing follow-through this month and has the Semis testing the topside of its one-year downtrend channel.
A breakout above this one-year bearish channel would be the first short-term bullish message in nearly a year.
In my humble opinion, this is a big test for technology leadership.
What Semiconductors do by the end of the month could send one of the most important bullish/bearish messages of the year.