A Momentum Burst Points to 13% Gains in Six Months

This essay was originally published in DailyWealth Trader, a daily trading advisory, and has been adapted. To learn more about this service, click here.

The market isn't just telling us to look beyond the Iran conflict. It's pointing us to one promising sector...

This sector was in the spotlight in early 2026. And now, it's taking off higher.

In fact, it broke out to new highs before the broad market did last week. And it just finished a rally that lasted 13 trading days in a row. That's the first time that has happened since 2014.

While this streak finally ended, we likely won't see a pullback in this sector over the next six months. More than a quarter century of data shows the opposite is likely...

I'm talking about semiconductor stocks. These chipmakers are at the heart of the AI revolution.

Even though technology stocks were selling off in late 2025, semiconductor stocks broke out to new highs. They rose 18.3% from the end of 2025 through late February.

Then, the Iran conflict took over the headlines, and they fell lower. But with peace talks now underway, the market is moving on.

Semiconductor stocks are a prime example of how the market is already rebounding. That's because they didn't just climb to new highs. They surged higher day after day... erasing all the losses from the sell-off.

This Pattern Points to Further Upside

We can see this in the VanEck Semiconductor Fund (SMH). It just strung together 13 higher trading days in a row. And after breaking that streak on Monday, it has continued to climb this week. Thanks to this surge, the fund is now making new all-time highs...

Longtime readers know that these momentum bursts often lead to even higher prices. And that's exactly what we see when we look at the history of semiconductor stocks.

We used SMH's underlying index to test this strategy going back to 2000. But SMH has only rallied 13 days straight one other time. So instead, we looked at what happened after SMH rose for nine consecutive days. That gives us more data to work with.

For 26 years, these momentum swings have been bullish over the next six months. And the returns crush a buy-and-hold strategy...

Semiconductor stocks have been a strong performer for more than a quarter century... returning 5.9% in a typical six-month period. But buying after a hot streak like we just saw does even better.

Similar cases led to gains of 4.1% in one month, 7% in three months, and 12.5% over the next six months.

Now, again, there have been only eight other cases like this one since 2000. But the numbers are still compelling.

That's because of those eight cases, six led to gains one month and three months later. That's a 75% win rate. And seven cases led to gains over the next six months... an 88% win rate.

So while our data is limited, the pattern is noteworthy. And it points to higher prices in semiconductor stocks from here.

If you're not positioned to capitalize on this sector, don't wait. Semiconductor stocks are set to take off even higher from here.

Good investing,

Chris Igou

Editor's note: Most investors think they've already missed the AI boom. But two market veterans say the biggest profits still lie ahead – just not in the stocks everyone owns today. They believe a major shift is coming that will create a new set of AI winners... including one company positioned at the center of it.