Episode summary
Over Half Of Tech Stocks Are Already in a Bear Market
Summary
Dylan Grice says a Turning Point Market Research report shows 59% of S&P 500 tech stocks are already at least 20% below their 252-day highs, while the S&P 500 Information Technology Index has fallen 8.4% since June. He argues that this breadth deterioration means the tech sector is already in a bear market, even if many investors have not fully noticed it yet.
He frames the decline as a warning sign similar to past market distortions, arguing that when chips reached roughly 20% of the S&P 500, the sector became too large and too crowded. He compares that setup to 2006–2007, when financials swelled to a similar share before the crash, and says the same kind of excess is visible today in chips, memory stocks, and the rush of companies trying to sell shares at high valuations.
Grice says he has already been taking profits in big tech and sees the selloff as healthy rather than alarming. He still likes parts of the group, especially Microsoft, which he says looks undervalued versus his estimate of at least $500 a share, but he also says he is finding better opportunities in energy and geothermal. His general playbook is to sell speculative names, move cash into money market funds, write a shopping list of preferred companies, and wait to buy when prices improve.
Key takeaways
- Dylan Grice says 59% of S&P 500 tech stocks are already 20% or more below their 252-day highs, which he treats as a bear-market signal.
- He argues the 8.4% drop in the S&P 500 Information Technology Index since June reflects weak breadth and a crowded trade.
- Grice compares the current chip concentration around 20% of the S&P 500 with banks’ similar weight in 2006–2007 before the crash.
- He says companies are rushing to issue stock because current market valuations are high and capital is cheap.
- Grice says he has been taking profits already and is now looking at energy, geothermal, and selected big tech names like Microsoft.
- He says Microsoft at around $380 could be worth at least $500 a share based on its business units and margins.
Notable quotes
“59% of S&P 500 tech stocks are now trading at least 20% below their 252-day highs”
“the S&P 500 Information Technology Index has dropped 8.4% since June”
“when one sector like that doubles its share of the S&P 500, basically, it's a serious warning sign”
“right before the market crash, banks had so many outsized profits from writing all those mortgages that their share of the S&P 500 was around 20%”
How the episode opens
Morning, this is Dylan Jovane with Behind the Markets. Happy Thursday. Today's Thursday, July 9th, and you know something, read a great little report out from Turning Point Market Research that says basically points out over half of all tech stocks are already in a bear market.
I didn't know that. That was very interesting. You could feel it though.
We can feel it though. It's at 59% of S&P 500 tech stocks are now trading at least 20% below their 252-day highs, which is very, very interesting. Very, very interesting.
Very high share of that, and it matches kind of a similar surge or similar breakdown in market leaders that we saw last year during gosh, funny, over a year ago, so-called liberation day, the tariffs. What's interesting, interestingly, the S&P 500 Information Technology Index has dropped 8.4% since June. So, you know, look, we see in the tech sector breadth especially with the chips sell-off.
We talked about it a couple days ago. Basically, the chip sector had become 20% chips, 20% of the S&P 500, which as I told you before, in my career, when one sector like that doubles its share of the S&P 500, basically, it's a serious warning sign. It's a warning sign.
It's a sell signal. And I remember very famously in 2006, 2007, right before the market crash, banks had so many outsized profits from writing all those mortgages that their share of the S&P 500 was around 20%, and you knew that that was not normal in an economy that grows at 2 to 3% a year, but financial sector really, you know, it became distorted as a percentage of the S&P 500 on a valuation basis. The same thing here with the chips and the memory stocks and all these other things.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tech bear market
- s&p 500 tech drawdown
- chip stocks weakness
- market sell-offs
- stock valuation
Companies and tickers mentioned
- MSFT
- Turning Point Market Research
- Microsoft
Watch the episode
Watch “Over Half Of Tech Stocks Are Already in a Bear Market” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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