SMH vs. IGV pairs trade: semiconductors lead software, convergence not confirmed

The materials reveal that software and semiconductors do not confirm as a mean-reverting pairs trade as of September 8, 2026. Semiconductors have outperformed software by approximately 3.3 percentage points daily, 8.8 points weekly, and a notable 100.9 points yearly. VanEck Semiconductor ETF (SMH) is currently at $576.22, up 1.62% today, 5.70% over a week, 51.44% over six months, and 94.36% over one year.

Conversely, iShares Expanded Tech-Software ETF (IGV) is at $102.86, down 1.64% today, 3.12% over a week, 16.94% over six months, and 6.50% over one year. SMH exhibits a higher beta of 2.4 compared to IGV's 0.99, indicating stronger recent momentum. Software demonstrates greater exposure to valuation compression and slower risk appetite, with a negative one-year return despite positive six-month performance.

This divergence suggests that the relationship between semiconductors and software does not confirm as a convergence trade, assuming semiconductor leadership continues. The risk lies in the potential for crowded trades and software rebounding sharply on improved growth or lower rates. SMH shows Strong Buy signals on daily, weekly, and monthly timeframes, while IGV is Neutral daily but Strong Buy weekly and monthly, indicating a mixed transition rather than a confirmed reversal.

The optimal approach would be to trade the spread around catalysts, with software strength requiring confirmation through improving momentum and a break above its daily pivot region near $105.05. SMH's weekly resistance is around $577.59, with support near $548.26. The conclusion drawn is that sector-relative momentum with optional convergence, rather than a confirmed pairs trade, should be the better conclusion.

Historical data is limited to 10 years on a Pro+ plan. The article was AI-generated and reviewed by an editor.