The semiconductor sector has been a standout performer in 2024, but recent trends suggest that its momentum might be slowing. So, let's examine the overall state of the sector, focusing on the Van Eck Semiconductor ETF (NASDAQ: SMH) and two leading names: NVIDIA (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM). By analyzing these names, we can better assess the current trend within the sector and the potential for further pullback and profit-taking.

The Semiconductor Sector: Key Insights and Current Trends

Year to date, the semiconductor sector has outperformed the overall market, primarily driven by the market giant and its top holding, NVDA. The sector ETF, SMH, has surged by almost 50% YTD despite falling nearly 7% in recent weeks from its 52-week high. The ETF is still above all major moving averages, but it's now consolidating below its 52-week high, hovering near its 20-day SMA, which is acting as short-term support.

If the ETF breaks below last week's support levels and the 20-day SMA, further declines might likely result in a sector-wide risk-off and profit-taking approach. Holdings in SMH have an aggregate rating of moderate buy based on 492 analyst ratings issued in the past year, covering 25 companies (99.9% of the portfolio). The ETF has an aggregate price target of $268.80, forecasting just over 3% upside.

To gain further insight into the overall direction of the sector, let's look at two of the top holdings of the ETF.

NVIDIA Analysts Remain Bullish: Moderate Buy Rating and Price Target

NVDA is the largest holding of SMH with an almost 25% weighting, meaning any significant directional movement in NVDA will impact the ETF and overall sector. NVDA has once again outperformed its sector and market this year, with the stock up a staggering 149% YTD, despite recently pulling back from its ATH and 52-week high by 12.23%. 

Given the company's impressive growth and dominance, <a ">analysts remain bullish, with a moderate buy rating and a price target forecasting an almost 2% upside.

From a technical analysis perspective, NVDA mirrors the SMH ETF. It has recently put in a possible lower high and is consolidating near its 20-day SMA. A move below last week's low and the 20-day SMA might result in further short-term declines, possibly moving towards its next support near $110 or its rising 50-day SMA.

Analysts Bullish on TSM: Moderate Buy Rating Despite Recent Pullback

TSM, like NVDA and SMH, has seen a recent pullback, falling almost 6% from its 52-week high and consolidating similarly. If TSM breaks below last week's support and lows, it would break its short-term uptrend, possibly moving towards $160 support or its rising 50-day SMA. TSM is the second-largest holding of the ETF with an almost 13% weighting. Analysts are bullish on the name with a moderate buy rating, but the consensus price target forecasts a slight downside of 0.1%.

Momentum Shifting? Technical Analysis of the Semiconductor Sector

From a technical analysis perspective, the positioning of the ETF and its leading names suggests that momentum might shift in the short term to favor a pullback toward short-term support levels. The recent consolidation patterns and critical support tests in SMH, NVDA, and TSM suggest potential declines if these supports are breached. Investors should watch these levels closely to gauge the sector's next move.