The recent relative strength shifts within the SIA Sector Matrix may have practitioners raising an eyebrow and tilting their heads as they try to understand what is unfolding in the electronics and semiconductor (E&S) space. In the latter half of 2024, the SIA E&S EWI Index sold off sharply on both a relative and absolute basis as many names corrected, only to stage a classic V shaped recovery that pushed the group back to the top of their respective indexes. By early summer 2025, the sector again led the market as many constituents rallied to prior highs, and a few even achieved new ones. Currently, the SIA E&S sector has once again sold off on a relative basis, falling to position 12 of 31 within the SIA Sector Report, as shown in the attached SIA matrix position table.
This concerning shift has emerged during the quiet trading weeks leading into the low volume Thanksgiving holiday period, when trading activity is extremely thin despite stocks having produced their strongest string of daily rallies since early spring. While this low volume rally has been impressive to watch, the relative moves beneath the surface might suggest a different story, in which leadership sectors such as E&S may be rolling over and possibly masking a rotation into safety oriented sectors such as the SIA Drug sector. Adding further uncertainty is a new technical development on the EWI sector chart, where what initially appeared to be a bullish shakeout now appears to be forming a Point and Figure Low Pole Warning, which is sometimes seen as bullish but can also be seen as bearish. Let us explain the Low Pole Warning in a little more detail.
A Point and Figure Low Pole Warning is a signal indicating that a sharp downward move was deep enough to damage the prior uptrend. Although buyers stepped in before a complete breakdown occurred, the recovery that followed is not considered fully reliable. It signals that while the sector avoided turning outright bearish, its earlier strength has been compromised and the trend may be starting to weaken. This combination of relative weakness, hidden sector rotation, and a deteriorating technical setup places the semiconductor group squarely in the hot seat heading into next week, when normal trading resumes and investors return from their tryptophan naps.
Important levels to watch on the sector chart include 112,000, which may act as a critical line in the sand where bears could again take major control. Below that, the next potential base sits near 101,442, and a more severe decline could bring the April 2025 lows back into focus, especially if major leadership names such as Nvidia and Broadcom come under pressure as well.
One name that advisors might want to keep a close watch on is Marvell Technologies, given its limited participation in the 2025 rally. Marvell is focused on data-centre infrastructure, cloud networking, custom silicon, and emerging AI-centric workloads. It has positioned itself as a key enabler of the high-bandwidth, low-latency architectures that modern AI systems rely on, particularly in areas such as optical interconnects, data centre switching, and custom accelerators designed for hyperscalers. While it is not an AI chipmaker in the same vein as Nvidia, Marvell is deeply tied to the underlying plumbing that makes large scale AI training and inference possible.
Despite that strategic importance, Marvell currently carries a negative trailing P/E because its earnings over the past year have been negative. The company has been weighed down by soft operating margins, elevated investment spending, and several non recurring costs that pulled down GAAP profitability. Yet the market is still affording the company a forward P/E in the mid 20s, generally around 25 to 27 based on recent estimates, signalling that analysts expect Marvell to return to profitability in the next year. This disconnect between negative trailing results and optimistic forward valuations underscores how much future execution is already priced into the stock.
The challenge is that the AI sector has entered a phase in which investors want real returns, not just long term promise. The build out phase of AI infrastructure at any cost is giving way to a demand for revenue growth that translates into near term profits and cash flow. This makes Marvell’s situation precarious, as its valuation assumes a clean earnings rebound at precisely the moment the market has shifted from rewarding ambition to rewarding delivery. If Marvell converts its AI related design wins into tangible earnings, the forward multiple is justified. If it stumbles, however, there is little buffer before the market reassesses the stock more harshly.
For the purposes of this report, we will send readers away with some homework to review the P&F chart of MRVL, but today we are highlighting a potentially ugly head and shoulders pattern that may be forming on the monthly candlestick chart. Three moving averages have been added to smooth out the price action, and shares are still trading above the 21 month exponential moving average while holding the 50 month simple moving average, which might now be seen as the neckline. Watching for any moving average crossovers, in combination with the rapidly declining sector relative strength, could become as important thematically for the broad market as it is for Marvell shareholders. In that context, the 200 month moving average at $30 is notable, and keen SIA practitioners will likely understand the implications.
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