Likely to see swift revision lower in semi-AI trade, says BTIG's Jonathan Krinsky

Added: 2026-05-11

[00:00:00]Now, can the rest of the tech trade catch up with the chip rally? Long way to go. My next guest thinks a catch down is more likely. Joining me now is Jonathan Kinsky, BTIG chief market technician. Why a catch down? I mean, software certainly has a just a little bounce would go a long way.

[00:00:18]>> Hey, John. So yeah, I think the conversation to this point has been, you know, how extreme the move in tech AI semis have been, but I think the conversation really needs to be shifting on, you know, not only what when will that rally exhaust itself, but why can't the rest of the market do anything as AI has been moving up and, you know, to put a couple statistics around this, um, the S&P as of today is 8% above its 50-day moving average. Yet, there's only 49% of S&P 500 components above their own 50-day moving averages. That is the fewest number of stocks above the 50-day with the S&P that far above its 50-day in history back 30 years of data that we have. Um, the next closest period you have, you have to go to the late 90s where you had about 60%. Um, and so, you know, there's a lot of stocks uh that are really not participating. And you know, there's a difference between when tech's leading and everything's moving up and techs are moving up at a faster pace and when when semis are doing what they're doing and the average stock is is actually moving sideways or lower.

[00:01:20]Another stat here, um, the S&P hit a hit a 52- week high on Friday. Uh, actually it's a 52e high today and 8% of the actual S&P names are at a 52- week low.

[00:01:32]That ties the all-time record in late 1999. So again, it's not just that names aren't participating. They're actually moving lower at this point.

[00:01:39]>> Yes. And which is a situation that would seem to cry out for diversification except that if you had done that earlier, maybe in too extreme a way.

[00:01:49]You're feeling dumb right now because, you know, look at how Microsoft and Amazon and Google did during earnings.

[00:01:56]Look at how concentrated this move higher is, as you were just saying. So as an investor trying to be disciplined, what are the charts telling you? How do you do it?

[00:02:05]You know, that's that's a good question.

[00:02:06]I mean, again, if you look at of the 11 S&P 500 sectors, the only sectors uh you know, to exceed their spring high of late have been technology, of course, REITs, which are a very small part of the market, and energy, which kind of has that inverse correlation to the market. So, um, you know, there's different pockets you can kind of try to get a little queue with, but the reality is the factor trading going on right now is so extreme, um, that it's just very difficult to get out of the either tech AI or non techch AI. And if it's not tech AI, it's really not working. Um, and I think we've gone long enough, you know, we're now several weeks into this new all-time high for the S&P 500, and the equate S&P 500 still can't make a new high. Um, so I think the reality is we're we're kind of in the later innings of the semi AI trade and we're likely to see a swift reversion lower and then we'll see. I think, you know, I don't think the the other names necessarily have to go down a lot following that, but um I don't think you're necessarily going to get a lot of upside as we see the online happen.

[00:03:03]>> History any help? Is there any period these charts remind you of?

[00:03:07]>> Well, again, there there's a lot of analogies to the late 90s, of course.

[00:03:11]Um, and I think from a pure price perspective that you have to you have to at least um appreciate, you know, some of these we did a note last week looking at the top 10 performing NASDAQ 100 names and the average move over last year has actually exceeded the average move of the top 10 names into both the end of 1999 and the all-time high in March of 2000. So, you know, you certainly have that setup. Part of what's different, right, is that uh right now it's companies, huge companies like your OpenAI's Anthropics that are still private that are driving a lot of the animal spirits in the market it seems. Whereas, you know, back in the day it was public companies with crazy valuations back in the in the late 90s, maybe a little bit into 2000 that were driving that. Is that is that functionally any different or um because the companies that are moving so much higher have real revenue and earnings or does the fact that it's startups private companies driving that still make the public markets that much more exposed?

[00:04:09]>> No, I I think that's a good point and you know look never markets are never exactly the same over any two periods. I think what we've been saying is that uh given that you know the fundamental backdrop is is arguably better now that likely means just that the on the tail end of this it's not going to be anything like we saw then right I mean the NASDAQ and the semiconductor index in from 2003 went down 85 90%. So, I don't think we're looking at anything like that. But, you know, just for perspective, just to get back to the, you know, the 50-day moving average, for instance, on the socks, that's you're looking at a 25% draw down. So, I think that's a very realistic possibility. Um, you know, even even if the fundamentals are are still quite strong here,