BTIG chief market technician Jonathan Krinsky said the biggest risk for markets is not a single negative headline, but a change in investor conviction around the market narrative that had previously been taken for granted. He pointed to a roughly 20% drop in the Philadelphia Semiconductor Index from its June high, putting it in bear market territory, while South Korea’s KOSPI has fallen more than 25% and Japan’s Nikkei 225 has entered a technical correction. In his view, those moves show that global technology stocks are under pressure. Krinsky said US equities could be at risk of a sharp pullback similar to the one seen in the summer of 2024, with the S&P 500 facing the possibility of breaking below its 200-day moving average at 6,983. If that happens, semiconductor shares could weaken further and the “Magnificent Seven” could lose their leadership role, weighing on the broader market. He added that one of the more troubling aspects of the selloff is the lack of a clear catalyst, even as investors point to concerns over chip-sector gains earlier this year, heavy borrowing tied to large capital spending plans by major tech companies, and uncertainty in the economic backdrop under the Federal Reserve’s new policy setting.
BTIG chief market technician Jonathan Krinsky said the biggest threat to markets right now is not any single bearish event, but growing doubts around the market logic that investors had previously embraced with confidence.
According to Krinsky, the Philadelphia Semiconductor Index has fallen about 20% from its June high, pushing it into bear market territory. South Korea’s KOSPI is down more than 25% on a cumulative basis, and Japan’s Nikkei 225 has also entered a technical correction. He said those moves point to mounting pressure across global technology stocks.
Krinsky warned that US equities could replay the sharp adjustment seen in the summer of 2024. In that scenario, the S&P 500 could fall below its 200-day moving average at 6,983. If that level breaks, semiconductor stocks may continue to weaken, and the so-called Magnificent Seven could lose the leadership position they had held earlier, dragging on the broader market.
He also said the more troubling feature of the current selloff may be the absence of a clear catalyst. Investors can point to several issues, including worries that chip stocks rose too quickly in the first half of the year, heavy borrowing by major technology companies to fund large capital expenditure plans, and an economic backdrop that remains uncertain under the Federal Reserve’s new policy setting.
In Krinsky’s view, those factors help explain the broader rotation now taking place in the market. Even so, he said the stock market has limited capacity to absorb weakness in its biggest and most crowded names, especially chip stocks, and that support will eventually run out.
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