Here in this space, we regularly check on the 2 subsectors i.e. Semis and Cybersecurity within the broader Tech sector. 
SMH and 
HACK have always outperformed the broader Tech sector ETF $XLK. During the last couple of quarters, we have seen the Cybersecurity sector has shown relative outperformance in comparison to the Semiconductor subsector within the technology index. When the SMH lost more than 37% of its value during the recent downturn, while HACK only lost 25% of its value. IN this blog space we have time and again focused on the topic of intrasector rotation. On 15th April I told you guys that the ratio chart of SMH / HACK looks overdone, and we might be set up for a reversal.
With both the sectors off of their local lows we can see that there is potential upside in both the sectors. But the question comes which one will outperform the other and if both of then outperform the broader index $XLK.
As I opined on 15th of AprilSMH looks to have a higher BETA from its lows in comparison to $HACK. In the last downturns we have seen from its lows of 2022 SMH 3Xed its price and HACK 2X in the same time period. So, if you are looking for relative outperformance in the near to medium term then we should rather LONG SMH over $HACK. And both SMH and HACK will outperform the 
XLK in the near to long term.
Verdict : LongSMH and $HACK. Overweight $SMH. Sell $XLK.
SMH and HACK have always outperformed the broader Tech sector ETF $XLK. During the last couple of quarters, we have seen the Cybersecurity sector has shown relative outperformance in comparison to the Semiconductor subsector within the technology index. When the SMH lost more than 37% of its value during the recent downturn, while HACK only lost 25% of its value. IN this blog space we have time and again focused on the topic of intrasector rotation. On 15th April I told you guys that the ratio chart of SMH / HACK looks overdone, and we might be set up for a reversal.With both the sectors off of their local lows we can see that there is potential upside in both the sectors. But the question comes which one will outperform the other and if both of then outperform the broader index $XLK.
As I opined on 15th of April
SMH looks to have a higher BETA from its lows in comparison to $HACK. In the last downturns we have seen from its lows of 2022 SMH 3Xed its price and HACK 2X in the same time period. So, if you are looking for relative outperformance in the near to medium term then we should rather LONG SMH over $HACK. And both SMH and HACK will outperform the XLK in the near to long term.Verdict : Long
SMH and $HACK. Overweight $SMH. Sell $XLK.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.