Further Rally Expected in VanEck Vectors Semiconductor ETF (SMH)

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

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

SMH Weekly Chart

As you can see in the above chart, the current main cycle for SMH started in 2008 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 the $124 – $140 area before another 3 waves correction similar to last year would take place in wave (IV) before the ETF will again resume the rally to new all time highs.

SMH 4H Chart

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