A strong July performance for the Nasdaq-100 may not be a sure thing now. The benchmark, made up of the 100-largest, non-financial companies in the Nasdaq Composite by market cap, has posted a July gain in 17 of the last 18 years. In that time, the index has averaged a 4.1% advance for the month. There's just one problem: Investors may have already front-run those gains this time. Despite the NDX registering a flat performance in June, it's still up 20% for the year, its best first half since 2023. Chip stocks, which have driven much of the Nasdaq-100's gains for the year, could also run out of steam soon. Wolfe Research strategist Rob Ginsberg highlighted that the PHLX Semiconductor index (SOX) moved 95% from its second-quarter low to its high. It also finished Q2 up 88%. "I've seen some outrageous quarterly candles throughout my career, but I'm not sure anything will top what we just experienced in the SOX Index," he said. Jonathan Krinsky of BTIG pointed to another troubling trend: "While July is quite strong for the SOX like the NDX, it actually tends to peak in mid-July. August is the WORST month of the year for SOX since '08 averaging a -0.96% decline and up just about 50% of the time." "Why does this happen? One explanation is that July starts the second half of the year, new money is allocated, and it's also the lead up to EPS season. Often times you get strong moves ahead of earnings, and once the actual news is out of the way you get a bit of a downside price vacuum," Krinsky added. Bottom line: While seasonality is historically in the Nasdaq-100's favor, it may not be enough to keep investors from paring positions after such a strong first-half performance.
<small>Source: CNBC</small>
