Chart of the Day - Monday, December 2, 2024

🏆 Today's Chart of the Day was shared by Steve Strazza (@sstrazza).
 

• After outperforming in the first half of 2024, the Semiconductor ETF ($SMH) is down -4.9% in the second half, while the S&P 500 is up +23.2%.
   
• Despite the narrative of an AI-driven bull market, $SMH has formed a *potential* Head & Shoulders Top relative to the S&P 500 ($SMH/$SPY). Meanwhile, laggards like $IWM and $ARKK are finally starting to work.
   
• Semis are a vital area of the market. If this top completes, it will cast a bearish shadow on the broader market. However, if this bearish pattern fails, it will be a green light for the bulls in the final weeks of the year. 
   

The Takeaway: Semiconductors are threatening to break down from a Head & Shoulders Top relative to the S&P 500 ($SMH/$SPY). Breaking down would spell trouble for 2025. However, if this top fails, it will be very bullish. Click here to read the full post.