Semiconductors put in another outstanding performance today, gaining 2.39% on heavier volume than Tuesday.  This was in spite of AMD (A component of SMH) losing 12.99% on a poor earnings report.  SMH has gained 55.68% since its closing low of 15.66 on February 23.  Remember - as semis go - so usually does the market. 

Below is a chart clearly showing the breakout in SMH on July 15 following the Intel earnings announcement.  Since then SMH has not looked back.  Also notice the confirmation given by the relative strength breakout vs. the S&P 500 in the lower pane. 



Some of the top performers in this space off of the February 23 low are: AMKR +200%, MU +119.22%, LSI +115.14%, and SNDK +113.85%.

Next is a chart showing the spread between SMH and the NDX (Nasdaq 100).  I have written in the past about this spread being a 'health barometer' for the broader market.  If the spread is heading up, that means semis are leading the NDX, and that speculative money is entering the market.  If it is falling, that usually means that risk is being removed from the market. 

This chart shows a parabolic move unfolding in this relationship.  These types of moves usually end in blow ups as buying reaches a frenzy stage.  This is an area to watch for the beginning of the first real selloff since the March lows in the market.:


The bottom line - be careful here.  There may still be some gains yet to be had, but this move can not be sustained at this pace.