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SMH nears official head-and-shoulders sell signal for semiconductors
The VanEck Semiconductor ETF could confirm the bearish pattern if it drops below its May 19 closing low of $543.
Semiconductor stocks are facing a renewed bearish technical setup, with the VanEck Semiconductor ETF, SMH, beginning to form a head-and-shoulders pattern, according to Yahoo Finance AlphaSpace chart analysis.
The left shoulder formed starting in mid-May, the head emerged in late June, and the right shoulder has now developed. The pattern would be considered official if SMH falls below the May 19 closing low of $543.
Head-and-shoulders formations are widely viewed as bearish because they can indicate buyers are losing control after an uptrend. During earlier parts of the pattern, buyers were still able to push prices higher, but the failure to drive new highs on the right shoulder is being read as weakening demand.
Yahoo Finance points to broader pressures on the semiconductor group as well, including worries that the AI spending boom may be cooling, potential export restrictions and tariffs, and questions about whether AI chip demand can keep growing fast enough to justify the capital spending plans and valuations already priced in. AMD chair and CEO Lisa Su said the company is seeing returns on investment and that demand for compute remains strong, according to Yahoo Finance.