JUN · ISSUE 26 · June 24, 2026

RISK · SEMIS

Chips collapse, the rest of the market yawns

One of the worst days for semiconductors in years sat next to a half-asleep VIX and a flat Dow. That disconnect IS the story.

SOX SEMIS

-7.9%

all 30 names red

KOSPI KOREA

-10%

SK Hynix -12%

S&P EQ-WEIGHT

-0.18%

the rest barely moved

THE NUMBER

-7.9%

↓ second day of a global semis selloff

The trigger was a major memory maker questioning the profitability of AI chips. Contagion jumped from Korea (SK Hynix, Samsung) to Europe (ASML, STMicro). But the damage stayed inside one sector.

DATA

ZOOM IN

$200B

▲ 2.7x what a 5% rally would buy ($74.5B)

It's like a car whose brake pushes harder than the gas. When the market drops, options mechanics force more selling, so it drops more.

A 5% drop forces $200B of automatic selling; a 5% rally only buys $74.5B. The fall accelerates on its own.

GAMMA: — Measures how fast options dealers' hedging accelerates near expiry.
FORCED SELLING: — Automatic orders that execute by rule or hedge, with no one deciding to sell.

QUOTE

AUTHORITY

The market stops trading on fundamentals

“When a 5% drop forces three times the selling a rally would buy, price no longer reflects fundamentals: it reflects hedging.”

Charlie McElligott · Cross-Asset Strategist · Nomura

When a drop forces three times the selling a rally would buy, price is driven by mechanics, not by company earnings.

FUNDAMENTALS: — A company's value from earnings and business, not from order flow.
HEDGING: — Trades dealers make to neutralize the risk of the options they sold.
DEALER: — A large liquidity provider in options that hedges its risk in the underlying.

TREND

LAST SESSIONS

The index lost its 7,415 floor

10 SES.6 SES.3 SES.TODAY

Losing 7,415 opens the door to 7,336 and, below that, to 7,234, the level you really don't want to lose.

The S&P came in from highs above 7,550. Semis pressure pushed it under 7,415, the support that held the upper zone.

MA50: — 50-session moving average: the index's medium-term trend.
SUPPORT: — A price zone where buyers tend to step in and slow the fall.

HOW TO READ IT

THREE SIGNS

Three signs it's a washout, not a top

THE REST HELD
The Dow closed flat and the equal-weight S&P fell just 0.18%. A real cycle top takes everything down at once, not one sector.
IT'S MECHANICAL
Leveraged ETFs sold $31.7B in a single session and margin debt is at a record high. This is forced deleveraging, not a fundamentals-driven exit.
THE BACKDROP HOLDS
Brent heading to $70 sinks inflation expectations, which pushes a rate hike further away. The structural picture is still supportive.

Telling a healthy deleveraging apart from a cycle change completely changes what you do with your portfolio.

DELEVERAGING: — Cutting debt or leveraged positions, often suddenly and by force.
LEVERAGED ETF: — A fund that multiplies (2x or 3x) an index move; it sells fast on the way down.
MARGIN: — Money borrowed from the broker to buy more; it amplifies gains and losses.

ANATOMY

THE EPICENTER

Where the selloff hurt most

ASIA (KOREA, MEMORY)SK Hynix and Samsung -12%45%

US (SOX)-7.9%, all 30 names red30%

EUROPE (CHIPS)ASML -4.9%, STMicro -7.3%25%

Illustrative weights of where the pain landed. AI memory was the epicenter; the rest fell by spillover.

The rout wasn't uniform: Asia took the bulk of the hit, with Europe and the US dragged in by contagion.

MEMORY: — Chips that store data (DRAM, HBM); key for training AI models.
CONTAGION: — When one market's drop drags others down through fear or linked selling.

WATCHLIST

5 KEY ETFs

Five to watch after the crash

SMH	238.40	▼ -7.9%	Semis ETF. A direct mirror of the SOX: today's epicenter.
SOXX	242.10	▼ -7.6%	Another semis ETF. Confirms the damage was sector-wide, not one name.
QQQ	598.20	▼ -2.2%	Nasdaq 100. Down less than semis: the rest of tech held up better.
RSP	182.05	→ -0.2%	Equal-weight S&P. Nearly flat: proof the broad market did not sink.
BIL	100.06	→ +0.0%	1-3 month Treasury bills. The boring shelter while chips bleed out.

Each tells part of the story: the semis epicenter, the broader tech index, and the rest of the market that barely moved.

ETF: — Exchange Traded Fund: a listed basket that tracks an index or sector.
NASDAQ 100: — Index of the 100 largest non-financial US firms, heavily weighted to tech.
T-BILLS: — Very short-term Treasury debt; a liquid shelter that pays interest.

WRAP

Washout or cycle change?

If this made clear why a -7.9% day in semis isn't the same as a market top, share it.

One carousel a day, Mon-Fri. Tomorrow another story, another concept.

Daily briefing · Mon-Fri 16:00 ET

WASHOUT: — A forced flush of the most leveraged investors that doesn't change the underlying trend.
TOP: — A cycle high after which the market changes trend.

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