Bull or bear market? AI spurs rethink of traditional market measures
Investors say a 20% drop may not fit chip stocks after the SOX and South Korea’s KOSPI still posted double-digit yearly gains.
- The Philadelphia Semiconductor Index and South Korea's KOSPI entered bear markets on Sept 2 based on the traditional 20 per cent drop, reigniting debate over whether this threshold applies to highly volatile sectors.
- Steve Sosnick, chief strategist at Interactive Brokers, argued the SOX would need to fall more than 44 per cent to qualify as a bear market; Art Hogan of B. Riley Wealth called the traditional classification "lazy nomenclature."
- Earnings for the semiconductor and equipment industry group are estimated to grow at least 114.7 per cent this year, according to LSEG-compiled data, while the Semiconductor Index remained up 46 per cent for the year.
- Joe Saluzzi, co-head of equity trading at Themis Trading, described the assessment as more of a "feel" type situation, while other investors propose using Moving averages and Fibonacci retracement to guide positioning.
- Since 1928, bear markets in the broader market have lasted about 9.6 months, according to data from Hartford Funds; if the current decline qualifies as a bear market, it is not a particularly unfriendly one.
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12 Articles
The Economic Times
Times of IndiaUS Market: Tech stocks challenge Wall Street’s traditional bear market definition
The traditional 20% threshold for defining a bear market is facing fresh scrutiny as highly volatile technology and semiconductor indexes remain sharply higher for the year despite entering bear-market territory. The SOX and KOSPI have revived debate over whether factors such as volatility, duration and economic conditions should complement the conventional measure.
Bull or bear market? AI spurs rethink of traditional market measures
Everyone knows Wall Street calls a 20% drop in a major index a bear market. But what do you call it when the index posts big gains and losses practically every day and is still way up for the year?
However, the rapid gains and sharp sell-offs triggered by the AI revolution are beginning to undermine the usefulness of the term bear market.
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