Semiconductor exchange traded funds, such as the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) and the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX), have been important cogs in the ascent of the broader technology sector in 2017. However, some traders are questioning the near-term potential of chip stocks.

The Technology Select Sector SPDR (NYSEArca: XLK), the largest technology exchange traded fund by assets, along with rival, traditional technology ETFs such as the Fidelity MSCI Information Technology Index ETF (NYSEArca: FTEC) and the Vanguard Information Technology ETF (NYSEArca: VGT) feature exposure to semiconductor stocks, but SMH and SOXX are more direct plays.

“It’s been a miserable week for semiconductor stocks. The S&P 500 industry group has fallen by more than 5 percent in the past week, and three S&P semiconductor stocks – Advanced Micro Devices, Lam Research, and KLA-Tencor — have fallen by more than 10 percent. Still, the group is up by 42 percent over the past year,” CNBC reported, referencing price action among chip stocks last week.

Investors could be paying up for future catalysts for semiconductor and broader technology names. If there is a silver lining for the rising valuations on chip stocks it is that some industry observers believe the group’s valuations should not be measured in the traditional sense because of the evolution of the semiconductor business.

“I see ongoing weakness in those semiconductors and technology, which will lead to a bigger summer seasonal pullback here in the S&P 500,” he added. “So watch those semiconductors — we’ve seen weakness since last Friday. If we go out on another low note, it sets us up for an extension of those declines into next week,” Evercore ISI technical analyst Rich Ross told CNBC.

Traders looking to make bearish bets on chip ETFs can consider the ProShares UltraShort Semiconductors (NYSEArca: SSG), which takes the -2x or -200% daily performance of the Dow Jones U.S. Semiconductors Index and the Direxion Daily Semiconductors Bear 3x Shares (NYSEArca: SOXS), which provides a -3x or -300% performance of the PHLX Semiconductor Select Index.

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