Could semiconductors go down 30% more?
If you believe the current drawdown of the semi stocks is already severe enough and is likely done for the decline, be careful about what may be coming. Share an analysis of its history that may indicate what's coming....
We focused on the PHLX Semiconductor Index (SOX) and its 50-week moving average, which is essentially its average closing price over roughly the past year.
In a healthy market, a pullback toward that line can attract buyers. Investors see an opportunity, step in, and help prices stabilize.
Last week, that didn’t happen. Semiconductor stocks fell through it.
So, we looked for previous instances of the same broad setup: a huge rally that stretched chip stocks far above their long-term averages, followed by a sharp break below the 50-week average.
Our study identified six precedents. Every one brought additional losses:
| Historical break | Additional decline |
|---|---|
| December 1995 | 24% |
| October 1997 | 34% |
| September 2000 | 59% |
| October 2018 | 16% |
| January 2022 | 35% |
| September 2024 | 21% |
That’s after the break below the 50-week average — on top of the losses that had already happened.
The median time to reach a bottom was 34 weeks, or roughly eight months. Applied to this selloff, that would put a potential bottom around July 2027.
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Another interesting dataset:
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