BUZZ-Flip chips back to large cap tech

** Chip stocks have stumbled vs both large cap tech and the broader Nasdaq Composite ; VanEck Vectors Semiconductor ETF spread vs Technology Select Sector SPDR Fund now looks to see further contraction

** SMH still outperforming YTD with 4.4 pct rise vs 0.8 pct XLK gain and IXIC 3.9 pct loss

** However, over past week, post-Brexit panic and recovery, SMH lagging both XLK and IXIC advances by 80 bps and 140 bps

** And so far today, SMH down 1.6 pct as Citi Research analysts make negative comments on the group; Q3 results to be impacted by Brexit fallout ; follows similar BofA-ML commentary last week

** Charts bearing out sour turn as SOX/Nasdaq Comp ratio now falling to 1+ month low, despite index bouncing off its post-vote low

** SMH-XLK spread had surged to daily closing high of $14.58 just prior to British vote; now $12.53. Chart: http://tmsnrt.rs/29l96Vn

** And despite bounce off $12.00 post-vote low, spread appears to be rolling over again; can decline to test support line from Feb low, now $10.00 area, at a minimum

** Need close back over $13.64 to suggest spread resuming advance