There's never been a semiconductor rally like this one - and that's triggering a number of warnings

By Jamie Chisholm

Parabolic moves 'only end one way,' says BTIG's Jonathan Krinsky

Warning: The SOX has not been so overbought in more than eight years.

U.S. stocks come to the end of a week in which they registered another record high, with the S&P 500 SPX now having bounced 12% from the March 30 trough.

In the vanguard of the latest bull stampede is the semiconductor sector, which is due to get another lift Friday as Intel shares see a big post-earnings-report pop.

But for some market observers, even those who buy into the longer-term promise of the AI narrative, the latest leg up - for the chip sector in particular - is all a bit much.

Jonathan Krinsky, technical guru at the investment bank BTIG, admits that he has been caught out by the continued strength in the PHLX Semiconductor Index, known by its ticker symbol "SOX." Along with Intel (INTC), the index includes the likes of Nvidia (NVDA), Broadcom (AVGO), Taiwan Semiconductor Manufacturing (TSM), Micron (MU) and Advanced Micro Devices (AMD).

"We'll own it," says Krinsky in a note published Thursday afternoon, having "been on the wrong side of semis."

"We thought the leadership was stretched and due to fade - yet strength has only intensified."

And intensified it certainly has. The SOX SOX on Thursday achieved a record 17-day winning streak in which it jumped 41%. It's the biggest 17-day rate of change since the index bounced out of an October 2002 bottom, which came after an 80% bear market, according to Krinsky.

"So this is the biggest such move into a new high in the history of the semiconductor index," he adds.

This astonishing rally has caused a number of technical indicators to flash red. Krinsky notes that the SOX now sits more than 40% above its 200-day moving average, which is the widest gap since June 2000.

Krinsky notes that the SOX's gap with its 200-day average did, in March 2000, exceed 100%, "but that was largely considered the biggest bubble in the modern era," he says. "Outside of that we are in extreme/unsustainable territory."

Unsurprisingly, such moves have pushed the SOX's 14-day relative-strength index, or RSI - a momentum gauge for which any figure above 70 is considered to be in overbought territory - to 81.98. MarketWatch calculations using FactSet data show that to be the highest RSI since November 2017.

The SOX's stampede is a key component of the momentum trade's resurgence, Krinsky argues, referring to a strategy of adding to holdings of stocks that already have strong upward price trends. The Goldman Sachs High Beta Momentum Long Index has just had its second biggest 18-day run in history, he says.

"Much of this can be attributed to semis, but there are also electronic components, optical, data center, and infrastructure. In other words, a pretty broad based AI basket," Krinsky adds.

He reckons that whether one does or does not consider the market to be showing bubble characteristics, the recent surge in momentum plays "is textbook parabolic price action." He points to the recent spike and dive in car-rental company Avis Budget (CAR) as proof that "parabolas only end one way: in equal and opposite fashion."

A final point. We should remember that overbought RSIs are useful as indicators of a short-term pullback and don't necessarily mean the longer-term trend is at an end. Indeed, an AI-assisted data crunch by MarketWatch shows that in the 34 times the RSI of SOX was over 80, the average return for the index in the subsequent 12-month span was 22%.

The markets

U.S. stock-indices SPX DJIA COMP were mostly higher at the opening bell on Wall Street as benchmark Treasury yields BX:TMUBMUSD10Y dipped. The dollar index DXY is lower, while gold futures (GC00) are trading around $4,720 an ounce.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              7108.4     0.95%   9.75%   3.84%   29.60% 
   Nasdaq Composite                                                     24,438.50  1.39%   14.16%  5.15%   42.37% 
   10-year Treasury                                                     4.337      8.60    -10.10  16.50   9.70 
   Gold                                                                 4700.4     -3.07%  4.69%   8.50%   41.14% 
   Oil                                                                  97.53      16.11%  -3.61%  69.88%  54.37% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

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The buzz

Oil prices (CL.1) fell from session highs after reports that the Iranian foreign minister may go to Islamabad, Pakistan Friday night to take part in peace talks with the U.S.

Tech-sector job losses are accelerating, with Meta (META) saying it will lay off 10,000 workers and Microsoft (MSFT) offering redundancy buyouts to about 7% of its U.S. workforce.

Intel shares (INTC) are jumping to a record high after the chip maker delivered better-than-expected earnings and forecast strong AI-linked demand.

Procter & Gamble shares (PG) are rising after the consumer-goods company reported better-than-expected results.

A U.S. special-forces operative has been charged with using classified information to reap more than $400,000 from bets on the ouster of Venezuela's president.

U.S. economic data due Friday include the final reading of April consumer confidence, released at 10 a.m. Eastern.

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The chart

It seems retail traders have become much more skeptical of the short-squeeze meme-stock narrative. The chart from Vanda Research shows that, for much of the spike and tumble in Avis Budget's stock (CAR), retail investors were huge net sellers - though many poor souls did still buy at the peak above $800. "The lack of strong retail participation may be a key reason why CAR has reversed sharply - and why we've not seen a GME-like moment for this stock," said Vanda, referring to original so-called meme stock, GameStop (GME).

Top tickers

Here were the most active stock-market ticker symbols on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   INTC    Intel 
   TSLA    Tesla 
   NVDA    Nvidia 
   INFY    Infosys 
   AMD     Advanced Micro Devices 
   AMZN    Amazon.com 
   TSM     Taiwan Semiconductor Manufacturing 
   MSFT    Microsoft 
   PLTR    Palantir Technologies 
   AAPL    Apple 

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Beyond the newsroom

MarketWatch Picks: 3 checking accounts offering 7% and up - plus 7 more of the highest APYs of April 2026.

-Jamie Chisholm

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04-24-26 0931ET