(Click on image to enlarge)

It has been a volatile week for the stock market, and technology stocks have taken another turn lower.

As we look to Friday and the end of the week, it’s time to check in on our often-followed tech leader: The Semiconductors Sector. We have placed a lot of focus on the underperformance of tech, as well as the turndown in the Semiconductors.

Today we hone in once again on the Semiconductors and ETF SMH in a classic chart 2-pack looking at an important trend line.

So without further ado, let’s turn to our trusted Joe Friday for “The Facts, Ma’am. Just the facts.”

As you can see on the “monthly” chart (left side), the Semiconductors have been in a strong bull market for the past decade-plus. SMH has spent the majority of its time trading within a rising price channel marked by each (1). That said, COVID sparked an uber rally in tech stocks that saw SMH break out above its overhead price channel to new super highs at the end of 2021.

But since then it has been a rough go. The market-leading Semiconductors have turned lower and are threatening to break down through trend line support at (2). And this could fuel a bigger sell-off.

We can see a close-up view of this trend line test on the “weekly” chart (right side).

If this market leader loses support at (2), odds increase that the tech selloff becomes much worse.