Semis stocks are down Thursday but surging this week.
"It definitely has been the leadership. It has also been the sign of the risk-on trade for the market. I think that even if you get a little short-term pullback in the semiconductor stocks here, I'd be a buyer of it," Craig Johnson, chief market technician at Piper Jaffray, said Wednesday on CNBC's "Trading Nation."
"When you look at this chart, the longer-term trend is still intact, you're above a rising 50- and 200-day moving average, and when you start unpacking the index and looking at some of the best-performing names -- the five largest names represent 40% of this index -- and those are all charts that look like buys, so I would be buying any pullbacks in the semiconductor stocks," Johnson said.
The top five stocks of the SOXX semiconductor ETF – Nvidia, Texas Instruments, Qualcomm, Broadcom and Intel – have had a mixed start to October. Nvidia has roared higher with 11% gains, Qualcomm and Broadcom are up more than 3%, and Texas Instruments and Intel have come in flat.
John Petrides, portfolio manager at Tocqueville Asset Management, also sees opportunity if the semis come under any pressure.
"I agree that you buy the dips for the semiconductors, I think there's way too many crosscurrents right now, and I wouldn't chase the rally that we saw last week. Let's not forget the index is up about % since December 2018. So, the group has performed quite strongly," Petrides said during the same segment.
The SMH ETF is also up more than 40% for the year, its best since 2009. Teradyne, Universal Display, KLA and Lam Research have led the ETF with gains of more than 70%.
"The long-term thesis of the 'internet of things' is going to be a big driver for the semis, but I would wait for the pullback. Don't forget semiconductors are commodities. They're just shiny, flashy steel and oil stocks. When demand slows down these guys lose pricing and that does bad things to margins and this group sells off so I would be more opportunistic and wait for the sell-off," Petrides said.