Infographic: The "Tech Soft-Hard Ratio" Indicator for US Stocks by Gelonghui

Glonghui May 8 | Looking at the trends since 2023, there has been a fundamental reversal in the relative strength between the US Philadelphia Semiconductor Index and the S&P Technology Software ETF: from 2023 to 2025, both rose in sync, with the software sector consistently leading the gains. However, entering 2026, the semiconductor index experienced a steep and independent rally, surging nearly 40% in the short term to a record high, while the technology software sector fell about 30% from its peak over the same period. Currently, the semiconductor index has deviated significantly from its medium- and long-term moving averages, sitting clearly in an overheated and overbought zone, while the software sector is fluctuating at relatively low levels. This divergence — with one side overheated and the other adjusting — sets the stage for a potential market style rotation.The risk of taking profits at elevated levels in the semiconductor sector is rapidly accumulating. Glonghui’s proprietary “technology soft-hard ratio” is used to track market style preferences and has strong predictive value. This indicator has already surged from below 2.0 during the same period in 2025 to nearly 5.5, repeatedly reaching new historical highs.