From Rails to Chips

Dow Theory has always been one of my favorite topics.

It’s wild how principles from over 100 years ago still apply today.

Back then, Charles Dow split the market into two groups: the companies that made the goods (Industrials) and the ones that delivered them (Railroads).

But in today’s world, goods and services are powered and delivered in a huge way by Technology — and at the center of it all are Semiconductors.

We've added Semiconductors to our analysis as we view these companies as modern transportation stocks.

They are the ultimate risk-on barometer. As they go, the market goes.

History has shown time and again just how critical this group is.

And here they are, making new all-time highs alongside the S&P.

For me, it’s really hard to fight the tape, especially at the index level when these stocks are doing well.

So I’m sticking with the trend, following the evidence, and letting the market prove me wrong if conditions change.

Stay sharp,

Alfonso De Pablos
Director of Research, All Star Charts