Software vs. semiconductors pair trade: where the setup stands now
The pair trade between software and semiconductor ETFs initially showed a 32-point spread in favor of software, but this week semiconductors are showing a notable reversal, outperforming by roughly 220-250 basis points intraday. The narrative began on September 14 when AI leaders called for paced AI development, causing software to surge while semiconductors fell.
The 3M data supports this with IGV up 19.65% and SOXX down 12.90%, resulting in a 32-point swing. Yet, semiconductors are now exhibiting mean reversion signs, with their technicals more stretched than software's. This shift in momentum challenges the initial pair trade thesis, as the mean reversion in semiconductors hasn't led to a wider spread confirmation signal yet.
Written by urgent.news from Investing.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
