Semiconductor stocks' epic rally has room to run, if history is any guide

VIDEO1:3001:30
Semiconductor stocks are up this year and have room to run
Key Points
  • The Van Eck Vectors Semiconductor ETF is up 50% this year.
  • The chip trade has kept the rally going in the past month.
  • Since 2010, market history suggests chip stocks have more room to run.

Semiconductor stocks have been soaring. This year the ETF that tracks the sector, the Van Eck Vectors Semiconductor ETF, has jumped roughly 50%. In the last month alone, the ETF has gained over 9%.

Among the stocks leading the chip sector higher: Advanced Micro Devices, Universal Display and Marvell Technology. Each has posted gains of around 20% in the past four weeks.

The rally could still have room to run, if recent market history is any guide. Two weeks after similar gains in the Van Eck semiconductor ETF, the bullish trend tends to continue.

The ETF trades positively 83% of the time, while adding another 2%, according to a CNBC analysis of Kensho, a hedge fund trading tool. The top-performing semiconductor stocks are Skyworks Solutions, Analog Devices and Maxim Integrated Products.

The strength in chip stocks also bodes well for the market. The S&P 500 performs well in these periods, with the index trading positively 92% of the time.

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VIDEO1:1001:10
Tech stocks' epic rally could continue, based on market history
Key Points
  • The S&P 500 Information Technology sector has soared more than 30% so far in 2019.
  • Since 1990, tech stocks have risen by at least 20% only five times in the period from the beginning of the year to the end of July.
  • Following these gains, the average S&P info tech-sector return for the rest of the year was 20%, according to a CNBC analysis of Kensho.