BTIG technical strategist Jonathan Krinsky says semiconductor stocks still have "unfinished business" to the downside. He points to a possible test of the 200-day moving average that would imply roughly a 17% decline from current levels, part of a broader note describing markets stuck in a holding pattern.
Semiconductor stocks have further to fall, according to BTIG technical strategist Jonathan Krinsky. He said the sector has "unfinished business" to the downside, with an eventual test of its 200-day moving average implying roughly a 17% decline from current levels.
Semiconductors stay below key trendline
The iShares Semiconductor ETF continues to trade below a declining 50-day moving average, Krinsky noted. The call came within a broader note describing markets as stuck in a holding pattern. He said the Nasdaq 100-tracking Invesco QQQ Trust has spent 27 trading days without breaking out of the range it set following an August 4 surge, and that Bollinger Bands are now as tight as they were in March. According to Krinsky: "our view remains that it will be to the downside".
Small caps flash a mixed signal
Nearly 5% of the Russell 3000 hit a 52-week low on Thursday, even as the index itself sat less than 3% from a 52-week high. Krinsky said that setup has historically been "a coin flip" over the following 20 trading days, but pointed to several prior instances that preceded meaningful drops, including March 2000, October 2007, July 2015, September 2018, January 2020, December 2021 and January 2026.
Among small caps, the iShares Russell 2000 ETF has spent ten days below its 50-day moving average with the slope now inflecting lower. He said the long-term trend remains bullish, but flagged risk of a test of the 200-day moving average later this month.
Bonds and energy point the other way
Krinsky also touched on bonds, noting that while sentiment is deeply negative and rates appear tactically extended, 10-year real rates have just emerged from a three-year trading range at a new cycle high. Elsewhere, he highlighted a parabolic move in crude shipping costs, with the Breakwave Tanker Shipping ETF up nearly 500% since the end of June. He also noted that energy stocks closed lower on the week despite WTI crude surging above $100 a barrel, adding that falling energy stocks shouldn't be read as bullish for the broader market.
Source: Investing.com
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