Chart of the Day – Friday, April 5, 2024

Semis vs. Commodities. $SOX $CRB.

KISS principle. pic.twitter.com/JJYlSFgAjs

— Brian G (@alphacharts) April 5, 2024

Today’s Chart of the Day was shared by Brian G (@alphacharts)..

• This ratio chart of Semiconductors vs. Commodities represents the battle between two narratives that have dominated the headlines in recent years:  “The A.I. Boom” and Inflation.

• AI stole the spotlight from inflation last year as Semis exploded higher, but inflation is rearing its ugly head again as Commodities have perked up recently.

• This is exactly where Semis began to underperform Commodities in 2021. If this ratio continues to be rejected at its former highs, inflation will likely dominate the headlines again. However, a breakout would reignite the AI narrative.

The takeaway: The narrative is at a potential inflection point. To quote the legendary Paul Tudor Jones: “Price turns, and then the narrative follows.”