S&P 500 vs Semiconductors The Market Is Splitting In Two

Weekly S&P500 ChartStorm - 2 August 2026

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2609(ESmain)$ $VanEck Semiconductor ETF(SMH)$

Learnings and conclusions from this week’s charts:

The S&P500 closed July down -0.1% (but still up +9.4% YTD).
Semiconductors have seen a 20%+ correction off the peak.
Semiconductors’ seasonality says down, volatility says up.
REITs and defensives are sounding a cautionary tone.
Resources capex is being crowded out by tech capex.

Overall, the carnage that unfolded last week in semiconductors is probably more likely setting up for consolidation and ranging (at best) vs the correction and resurgence like we saw earlier this year, as various risk flags continue to wave…

1. Happy New Month!

The S&P500 closed July down -0.1% on the month (vs the equal-weighted; up +0.9%, and Nasdaq; down -6.6%). This places it still up YTD at +9.4%.

Eyeballing the monthly chart you can see the May peak, but for now it’s hanging in there above its 10-month moving average, with non-tech stocks pulling their weight and helping offset some of the weakness in AI/Big Tech.

2. Semis Pick-a-Path:

Semis on the other hand fared much worse, down over-20% vs June one point. Promisingly they managed a bounce off a logical support area, and 50dma breadth is looking thoroughly washed out.

But it does leave us at a pick-a-path moment; when breadth collapses like this it can end one of three ways: a bear market (e.g. 2022), consolidation (2024), correction (2025). My best guess is either bear or consolidation; we’ve had an exceptional run already, and meanwhile there are just so many macro hurdles piling up. Maybe you do get a correction situation where it punches onwards and upwards to new highs, but for now I struggle to see the catalysts for that.

3. SOX Seasonal Slump:

seasonality is giving a vote to more ranging and consolidation, with a slight bearish hue all the way into October. Maybe once you get the mid-terms done, and if you can wrap up the geopolitical mess it could help clear the path higher.

4. Semiconductors Volatility Events:

meanwhile, one for the bulls — big volatility spikes in semiconductor stocks basically served as big buying opportunities. Different this time?

5. The KOSPI Crash:

the KOSPI saw a reverse crash on Friday, up +17.91% on the day, but still down over 27% off the peak. This is a classic bubble bursting situation where reckless leverage and madness of the crowd saw wild speculation in the new AI paradigm (and not helped by poor supervision; the government eagerly scrambling to try and stabilize markets on the way down, but sleeping at the wheel and even tacitly encouraging speculation on the way up).

The bounce comes off of what looks like a fairly logical support level, but it’s very common to see record breaking up days during bear markets (the biggest up AND down days tend to cluster). So I don’t think the storm has passed here quite yet. Probably needs to see another test of support and a bit of consolidation.

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