Independent research firm BTIG recently released a report indicating that the trajectory of the High-Beta Momentum factor (ticker SPMO) is increasingly mimicking classic boom-bust cycle patterns, though the firm explicitly states it is "not yet characterizing it as a bubble." In a strategy report titled "Anatomy of a Bubble," BTIG technical strategist Jonathan Krinsky wrote that the firm is "not yet calling High-Beta Momentum a bubble," but the factor's recent price action has begun to "resemble" historical speculative cycles.
BTIG noted that the High-Beta Momentum basket has surged 3,500% from its 2009 low to June 2026, surpassing the Nasdaq Composite's 3,092% gain over the 18-year period from 1982 to the peak of the internet bubble in 2000. Additionally, over the 32 months ending June 2026, the High-Beta Momentum factor's cumulative change was 373%, compared to the Nasdaq Composite's 225% gain and the Nasdaq 100's 345% gain during the 32 months leading up to the 2000 peak. Krinsky remarked: "It is clearly too early to say whether this factor, and the related stock group, will end as past bubbles have. But as we show later in the report, many aspects of the recent price action are highly consistent with the characteristics of prior similar cycles."
The recent decline also follows historical patterns. BTIG reviewed eight classic boom-bust tops, including the Dow Jones Industrial Average (DJI) in 1929, the Philadelphia Semiconductor Index (SOX) in 2000, the Homebuilders ETF (XHB) in 2005, China-related indices (MCHI, FXI) in 2007, Bitcoin (BTC-USD) in 2018, bonds in 2020, the ARK Innovation ETF (ARKK) in 2021, and Silver (SLV) in 2026. The study found that the initial decline after these tops averaged 35%, occurring over an average of 26 trading days. The current High-Beta Momentum factor fell exactly 35% over 26 trading days from its June 22 peak to its July 29 low, perfectly matching the historical average. "This is somewhat uncanny," Krinsky wrote.
BTIG further pointed out that in these historical cases, the median rebound after the initial decline was 35%, lasting about 14 trading days. If this pattern repeats, momentum stocks and the semiconductor sector could see a tactical technical bounce, potentially retesting the 50-day moving average around mid-August. However, BTIG also warned that if market conditions continue to deteriorate, it would be prudent not to hold on. Regarding the semiconductor and artificial intelligence sectors, the firm believes "it is clearly too early to say the cycle is over," but notes that the Philadelphia Semiconductor Index has already experienced a 29% pullback in about a month, followed by a 13% rebound.
Seasonal factors may also complicate the broader market outlook. BTIG noted that since 2010, August has been the worst month for the S&P 500 Equal Weight Index (RSP), with an average decline of 0.95%, while September is the second-worst month. Interest rates remain the biggest variable. BTIG stated that if the 30-year US Treasury yield (US30Y) rises rapidly, it would create headwinds for the entire market, and the "speed" of the yield increase is more critical than the "absolute level."
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