The iShares Semiconductor ETF SOXX has been on a bullish run, boasting a 25.16% gain year-to-date and a remarkable 45.12% rise over the past year.

Tracking U.S.-listed semiconductor sector equities, the iShares Semiconductor ETF rode the surge in demand for AI, cloud computing and automotive technologies.

But as the industry faces ongoing geopolitical tension and supply chain disruptions, a looming technical indicator casts a shadow over its rally.

Despite its strong performance, the iShares Semiconductor ETF is flirting with a potential Death Cross — a bearish signal that occurs when a short-term moving average crosses below a long-term one.

Chart created using Benzinga Pro

While the iShares Semiconductor ETF’s share price currently sits at $231.08, well above its five-, 20-, and 50-day exponential moving averages, it’s teetering dangerously close to its 200-day SMA at $221.20.

This suggests that while the ETF remains technically bullish, buying pressure could taper off if global market conditions worsen.

The current Moving Average Convergence Divergence (MACD) reading of 1.87 supports the bullish trend, yet the Relative Strength Index (RSI) of 55.43, and rising, indicates potentially overbought conditions coming up, which would hint at a possible correction.

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Sales in the semiconductor industry have seen a sharp recovery, jumping 20.6% year-over-year in August. Export controls and geopolitical tensions — particularly around U.S.-China relations — still pose challenges.

The CHIPs Act in the U.S. and parallel efforts in Europe and China are intensifying the global race for semiconductor dominance.

As the iShares Semiconductor ETF edges closer to a Death Cross, investors may need to brace for potential volatility despite the ETF’s robust recent gains.

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