The Most Important Charts In The World For 2026 Chart #1
Chart #1-The SOX/SPX Ratio YoY
What has been the number one topic in markets over the past two years?
If you said AI then we are on the same page. AI and the associated power and semiconductor buildout have been the primary driver of equity markets as the hyperscalers are around 40% of the SP500 and it is rumored that OpenAI and SpaceX will go public in 2026.
As we covered in detail a few posts ago here-The SOX/SPX YoY A Semiconductor Cycle Leading Indicator , we have found one indicator that has been leading markets in the post global financial crisis era, and has done even better over the past 10 years as tech, and semiconductors, have been one of the biggest drivers of the overall market.
The indicator is the SOX Index divided by the SP500 and looked at year over year. The SOX/SPX Ratio YoY not only moves before the broader market, but it also does a great job of leading the Semiconductor Billings Index, which happens to move with the SP500.
Right now the SOX/SPX Ratio YoY as well as the Semiconductor Billings Index are towards their historic upper end. We are hesitant to say that as they are not off the charts, just getting into the normal upper part of the range. As you can see in the following chart of the Worldwide Semiconductor Billings Index YoY and the SOX/SPX Ratio YoY have definitely shot off the charts in the past, and there is nothing saying it can’t do it again.
With that we name this chart one of the most important charts in the world for 2026. It is a leading indicator for the semiconductor cycle, and as semiconductors are vital to AI expansion, and are also in almost every single electronic device we use today, this cycle has been, and is likely to continue to be, critical to catching the cyclical growth moves in the market.
If either the SOX/SPX Ratio YoY or the Semiconductor Billings Index YoY turns down, then we are likely to see equity markets drop. If on the other hand they keep moving higher and/or just go sideways, then markets are likely to continue moving higher. And before you run out and get super bearish keep in mind that they have gone sideways for months at a time before and can do so again.
Conclusion
A lot of things can happen, almost anything can happen, but if semiconductors continue to crush it then earnings are markets are likely to continue to do well. If on the other hand they fall on less than stellar times they are all likely to move lower. We are not in uncharted bubble levels, but we are in the neighborhood of a bubble.
You can create the SOX/SPX Ratio YoY with Excel or almost any charting platform, and you can get the monthly Semiconductor Billings Index data for free online. Based on the past 30+ years we think you would be wise to follow them both.
Happy Trading,
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