Summary
BTIG technical strategist Jonathan Krinsky says the recent reversal in technology momentum may continue, with additional downside still ahead for both broad tech exposure and semiconductor stocks. Krinsky highlights extreme prior positioning, specific ETF price-action and moving-average targets as indicators that further declines are a reasonable prospect.
Market context and technical read
Krinsky characterized last week’s selloff as the predictable consequence of stretched positioning. "It went the way it had to, the way it was always going to," he wrote, pointing to what he described as a negative outside week for the XLK ETF and a clear rejection of new highs. He framed that pattern as the inverse of the early April candle that initiated the multi-month rally.
Before the downturn, the technology sector displayed unusually strong technical readings. Krinsky noted an 82 reading on the relative strength index and observed that the sector was trading about 28% above its 200-day moving average.
Targets and potential downside
Krinsky said a retreat to the 50-day moving average would be a normal corrective outcome and that such a pullback "suggests there is still ~9% downside risk at a minimum." For semiconductors specifically, he identified the SOXX ETF as retaining roughly 14%-17% of downside to its 50-day moving average, which he described as a reasonable target for the group.
Momentum and factor risks
High-beta momentum experienced a very sharp one-day decline on Friday, representing its worst single-day drop since the onset of the COVID-19 selloff, falling approximately 9.5%-10% on that session. BTIG quantified additional unwinding risk for the long/short momentum factor at about 11%-12%.
Sectors on the other side of the rotation
As technology and momentum have weakened, Krinsky pointed to healthcare and financials - the two worst-performing S&P 500 sectors year to date through June 2 - as beginning to emerge from multi-month bases. He also noted strengthening in REITs and consumer staples. "The historic dispersion we saw over the last couple of months has started to unwind, and we think there is more to go before things settle down," he wrote.
Conclusion
Krinsky’s view centers on technical signals and moving-average targets rather than fundamental forecasts. His estimates place additional downside risk for broad technology exposure at roughly 9%-10% and for semiconductor exposure at about 14%-17% to the 50-day moving average, while also highlighting rotation into defensive and cyclical pockets of the market.