Institution: There are two historically rare divergence signals in the US stock market, with a probability of about 67% of falling into a bear market in the next three months

BlockBeats news, on June 30th, research firm Ned Davis Research stated that there have been two historically rare market divergence signals in the US stock market recently: one is that the Philadelphia Semiconductor Index (SOX) continues to hit new highs, while the "tech seven giants" are clearly lagging behind; Secondly, there is a significant divergence in the trends between the Dow Jones Industrial Average and the Nasdaq Composite Index. Historical data shows that such situations often occur near important turning points in the market. According to data, as of mid June, calculated on a 26 week rolling basis, the Philadelphia Semiconductor Index outperformed Bloomberg's "Tech 7" index by over 100 percentage points, and the correlation between the two dropped to the lowest level since the end of 2021. Ned Davis Research pointed out that similar divergence occurred in 2021, followed by peaks in the "tech seven giants" and the semiconductor sector, and the US stock market entered a bear market in 2022. Meanwhile, in the seven trading days leading up to June 25th, the Dow Jones Industrial Average rose 0.5% while the Nasdaq fell 5%, with a rolling performance difference of 5.5 percentage points between the two. Since the establishment of the Nasdaq in 1971, such a significant divergence has only occurred on about 1% of trading days. According to historical statistics, the probability of a bear market in the next three months after similar differentiation is about 66.9%, significantly higher than the historical average of 24.8%. However, the institution emphasized that the above statistical patterns do not necessarily mean that a bear market is bound to come, but the current market rise lacks widespread participation, and the differentiation between different industries continues to expand. Investors should continue to pay attention to whether the above divergence is further exacerbated and timely manage risks. [Original link]