Further Rally Expected in Semiconductor ETF SMH

VanEck Vectors Semiconductor ETF (SMH) tracks a market-cap-weighted index of US-listed semiconductors companies. Such companies include big technology names like Intel (INTC: NASDAQ) and  Nvidia (NVDA: NASDAQ). The ETF is currently up +30% year-to-date making new all time highs and leading the move among few other instruments.

For this article, we’ll be taking a look at the technical weekly and 4 hour charts of SMH based on the Elliott wave Theory :

SMH Weekly Chart

SMH Weekly Chart 4.30.2019

As you can see in the above chart, the current main cycle for SMH started in 2008 low after the financial crisis. Up from there, it rallied higher in a series of Motive or Impulse waves which subdivide into 5 waves in lesser degree cycles of each leg.

The current wave V of (III) presented above is looking ideally for a target at $124 – $140 area before another 3 waves correction similar to last year would take place in wave (IV) then the ETF will again resume the rally to new all time highs.

SMH 4H Chart

SMH 4H Chart 4.30.2019

Using the 4 Hour chart, we can clearly see the 5 waves subdivision of the lesser degree cycles coming up from December 2018 low. Up from there, the ETF is showing a bullish sequence higher which is aiming for target at 100% – $161.8% Fibonacci extension area $124 – $140. Consequently, the short term pullback will be expected to remain supported above $99 low for the ETF to extend further to the upside.