Investors should use a potential rebound in semiconductor stocks to reduce exposure ahead of what is likely to be a “longer drawn out decline” that could stretch into 2027, according to BTIG. In a research report published Sunday, the firm highlighted mounting doubts around artificial intelligence sector and weakness beyond the broader market’s surface. “There are certainly more doubts creeping in about the AI complex of late,” BTIG’s, managing director and chief market technician at BTIG, wrote in the note. “While those may prove to just be smoke, history suggests where there’s smoke there’s often fire.” The Philadelphia semiconductor index, or SOX, lost 11.4% last week, clocking its worst weekly decline since April 2025. Meanwhile, the iShares semiconductor ETF (SOXX) has logged nine consecutive daily losses. SOXX 3M mountain SOXX chart Krinsky warns that while a relief rally can be expected, there is limited assurance that such gains would last, according to historical data. Following instances of weekly SOX losses of at least 10%, the index rose the next week 43% of the time, with an average return of +1.7% and median return of -1.7%. In three weeks, returns were positive in only 60% of cases. BTIG also questioned whether investors should take comfort in the S & P 500’s relative resilience. Since June 1, nine of its 11 sectors have experienced declines of at least 9% from their respective peaks, while the index’s maximum drawdown was 5%. For semiconductor investors looking to reduce exposure ahead of a potential decline, BTIG identified roughly $490 as a key support level for SOXX. A break below that could trigger a slide toward its 200-day moving average near $468. Even if buyers step in, BTIG’s broader assessment remains bearish. “Should we get a counter-trend rally, that’s likely an opportunity to reduce exposure.”
‘Where there’s smoke there’s fire’: Why BTIG is sounding the alarm on tech
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