Semiconductor stocks did something not seen since the dotcom bubble burst. What the charts show

As if the recovery in the Nasdaq from the March 30 low wasn't shocking enough, take a look at how the VanEck Semiconductor ETF (SMH) did relative to the benchmark index. The SMH/ QQQ weekly ratio chart broke out to a 26-year high. It's an all-time high going back to May 2000, just two months following the March 2000 tech bubble high. Let this sink in for a moment. The last time the semiconductors outperformed the Nasdaq-100 to the degree we're seeing right now was in the dotcom bubble. But before you suggest I'm calling for another bubble bursting, far from it. The SMH relative to the broader tech trade is powering ahead with a break to new highs, which is not something you tend to see at the end of trend. I'll show on a key semi player below that the fundamental valuations are far from stretched in a "bubble-icious" manner. Semis represent about 30% of the Nasdaq-100 ETF QQQ and have done a lot of heavy lifting not only since that March low, but since the rally began in 2015. Now here's where it gets interesting. Pulling up a weekly chart of SMH going back to 2018 you'll see some relationships that are almost too clean to be real — but they are. The first major bullish wave from the 2020 lows amounted to a 232% rally at 42-degree angle based on the scaling I'm using. The second major bullish wave launched from the post-2022 lows and the real AI buildout amounted to a 239% rally at a 41 degree angle. 232% and 239% at a 42- and 41-degree angle. …