Weak S&P 500 Transports, Semiconductors portend broader trouble

Two leading broad-market indicators show signs of weakness, suggesting an underlying rotation out of risk is likely underway in U.S. equities.

Transportation’s decline started with airlines but now includes air freight, railroads and trucking. Semiconductors, leaders in the equity market for most of this year, are joining in.

Historically, one of these segments can decouple from the market, but when both weaken, it spells trouble for the S&P 500.

It’s too early to call the end of the bull trend, and so far the rest of the S&P500 is absorbing losses in these industries relatively well. While most S&P 500 transports have reported 2Q results, semiconductors could turn sentiment in the other direction, with many yet to release earnings.

Source: Bloomberg Pro Terminal

Trader – S. Fuchedzhiev

 Varchev Traders

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