$SMH vs $HACK Ratio Chart: Intra Tech sector rotation

SMH with closing @ 180 $ on 04 April 2025 is equivalent to drawdown we saw during COVID crash. During the covid crash the semiconductor ETF lost 37% and this tariff crash we also saw 36% drawdown. But in contrast to that the current tariff environment has only a peak drawdown of 25% in $HACK. HACK is the ETF of the largest Cybersecurity in the market. Within the Technological sector there is a intra sector rotation form Semi and Software to Cybersecurity.

This weakness in SMH can be attributed to heavy weights like NVDA and AVGO which have been down more than 40% form their ATH. But in contrast CRWD, PANW and other cybersecurity stocks have shown great amount of strength.

In this ratio chart we discussed earlier in this blog that there is a head and shoulder pattern forming indicated in the blue but then the drawdown in SMH pushed it below the neckline and we went below 3.15. The next level in the ratio chart is 2.71 to which we are very close. From the peak the ratio is down almost 40% which is the same as the drawdown in $SMH. The RSI in the chart is also oversold @ 28. My expectation the second neckline will not be broken, and we will hold the 2.7 ratio.

Verdict: Overweight SMH over $HACK. Both are good long-term buys.