Wall Street is in a buying mood. AI industry leaders had to bleed a bit before joining in.
The PHLX Semiconductor Index (^SOX) fell below Friday’s close early, returning Monday’s rebound from an eight-game losing streak, as my colleague Inès Ferré reported. Then, the buyers presented themselves directly to the summer floor, almost 11,000 people.
Chart watchers are familiar with this pattern.
A fall below support that quickly reverses is a bear trap, catching traders betting on a breakdown. But this only matters if the tokens close above Friday’s level again.
And history says we shouldn’t relax just yet. After every losing streak of seven sessions or more since 1994, the index has traded below the final closing level of the streak in a month. After the longest, it was mostly lower a month later.
A report from BofA Global Research calls last week’s rout “a setback related to positioning on the fringes of the AI business.” The credit market isn’t so sure. Oracle’s debt insurance cost is at its highest level since at least 2021, and even megacap default swaps are increasing.
A close above 11,137 triggers the trap. Lose 11,000 and the next stop is closer to 10,450.
Gn bussni
