This sector may have hit bottom

It's been a rough month for the overall market. But for the semiconductor sector, the recent selloff has been outright painful. Yet could it be setting up for a buying opportunity?

The PHLX Semiconductor Index – called "the SOX" – may have had bounce on Tuesday. Still, the index, which includes the likes of Qualcomm, Intel, and Texas Instruments, is down 15 percent from its 13-year of 659.54 set just last month.

(Watch: Intel shares jump as profits, revenue top estimates)

Nonetheless, Gina Sanchez, founder of Chantico Global, sees a potential upturn ahead.

"Semiconductors have been fantastically profitable, and they have been a huge portion of earnings in the tech space," said Sanchez, a CNBC contributor. "However, they became extremely overvalued and some of this blow-off really was necessary."

From the start of the year until Sept. 18, the SOX gained an impressive 22.9 percent. But because of the selloff, it is now just 4.7 percent in positive territory year-to-date.

Sanchez said the downturn in the sector was compounded by weak seasonality for the markets overall; October is on average the weakest month of the year for stocks.

"For the short term, I think it's probably going to be pretty soft," Sanchez said. "But this has been a very, very profitable industry so it's worth a long-term look."

A long-term chart of the ETF, which tracks the Semiconductor Index (trading under the ticker symbol SOXX) is positive, according to Ari Wald, head of technical analysis at Oppenheimer. Yet he does see some potential for a little decline in the shorter-term.

"It sets up as a 'buy' but looking at the long-term chart, I think it's too early to say [Tuesday's] inflection is really marking the low," Wald said.

(Watch: Don't dump these beaten-up stocks: Value investor)

The level Wald is watching in the SOXX is $70 per share (The SOXX trades at a value of about 13.6 percent of the PHLX Semiconductor Index). "That was the real breakout point," he explained. "That was the prior peaks from earlier in the decade. I think that on the downside is going to be support."

Wald said he's look for the ETF to stabilize around that level. "If we get it, I think that it becomes very constructive as a buy," he added.

To see the full discussion on the PHLX Semiconductor Index, with Sanchez on the fundamentals and Wald on the technicals, watch the above video.

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