Opinion: What remains unresolved is the biggest “mastermind” behind the stock market selloff, and the US stock market may face a pullback similar to the summer 2024 correction

BlockBeats news, July 18: BTIG Chief Market Technical Analyst Jonathan Krinsky said the biggest risk in the current market is not a single bearish catalyst event, but investors beginning to question the market logic they had previously held with absolute confidence.

Krinsky believes the Philadelphia Semiconductor Index has fallen about 20% from its June high, entering a bear-market range. South Korea’s KOSPI has cumulatively dropped more than 25%, and Japan’s Nikkei 225 has also entered a technical pullback, reflecting pressure on global technology stocks.

He warned that the U.S. stock market could see a large adjustment similar to the summer of 2024. There is a risk that the S&P 500 could break below its 200-day moving average (6983 points). If this scenario occurs, the semiconductor sector may continue to weaken, and mega-cap tech stocks such as the “Magnificent Seven” could also end their prior streak of leadership, dragging down overall market performance.

What may be even more worrying in this sell-off is that it truly lacks a clear catalyst. While a series of issues can be cited—including concerns that the chip sector’s first-half gains were too rapid, large technology companies taking on huge debt for major capital expenditure plans, and an economic backdrop under the Fed’s new policy that remains full of uncertainty—this helps explain the rotation happening across the broader market. However, the extent of weakness that the stock market can withstand in its biggest and hottest stocks (such as chip stocks) is limited, and it will ultimately be difficult to sustain.