Semiconductor-Mag7 Correlation Falls to 2021 Lows, Signaling Potential Market Peak Risk

According to Ned Davis Research analysts Pat Tschosik and Philippe Mouls in a report released Monday (June 29), the 26-week rolling correlation between the Philadelphia Semiconductor Index (SOX) and the Magnificent Seven tech stocks has fallen to its lowest level since late 2021, potentially signaling a market correction.

The Magnificent Seven—Alphabet, Meta, Amazon, Apple, Microsoft, Nvidia, and Tesla—have declined 3.7% year-to-date, while the SOX has surged 94%. The correlation reversal mirrors conditions preceding the 2022 bear market, when the S&P 500 posted its worst year since 2008. The analysts stated: "We continue monitoring this indicator as the correlation reversal successfully flagged a warning in 2021."