The Philadelphia Stock Exchange Semiconductor Index (SOX) has experienced considerable volatility, with 15 instances of 3% price movements in the last 30 trading days. On Thursday, the index closed up 3%, but it remains below its 20-day moving average while above its 50- and 200-day moving averages.
BTIG's chief market technician, Jonathan Krinsky, highlighted that similar patterns in the past have often preceded significant drawdowns, citing historical instances from 1995, 1997, 2000, 2020, and 2024. The index has seen a year-to-date gain of over 80%, despite a recent downturn in July.
Analysts at Jefferies noted that the Russell 2000's semiconductor stocks have outperformed historical gains leading up to the dotcom crash, but they remain cautious. Additionally, South Korean memory chipmaker SK Hynix is set to begin trading on the Nasdaq, with plans to raise nearly $30 billion through the issuance of new shares.
This influx of shares could further impact the market, with Morgan Stanley and UBS traders suggesting it may lead to additional downside pressure