Carter Worth on Software vs. Semis Pair Trade Opportunity

Technical Analysis of Software and Semis

• 💡 Carter Worth maintains his underweight stance on the tech sector, specifically software (IGV), believing it will move lower.
• 🎯 Despite the overall bearish view on software, the current relationship between IGV and semiconductors (SOX) presents an extreme divergence.

Comparative Performance Over Time

• 📊 A one-year comparative chart shows semis moving up while software moves down, with the tech sector as the whole.
• 📈 Over a two-year timeframe, semis have gained 73% while software has only gained 14%, indicating a significant performance gap.
• 🚀 The three-year chart further accentuates this trend, with semis up 170%, doubling the performance of software.

The Pair Trade Opportunity

• 🧩 By holding the tech sector (the whole) as a constant, the chart highlights the extreme divergence between its two parts: semis and software.
• 💰 This significant spread between the two segments of the tech industry is identified as a pair trade opportunity for traders.
• ⚠️ The recommendation is to initiate this pair trade now, irrespective of the independent view that software is likely to decline further.