Sometimes the Nasdaq-100 rallies while semiconductor stocks fail to participate.
That divergence can look like an obvious catch-up trade.
If the broader technology market is strong, surely semiconductors should eventually follow.
History suggests the answer is less convincing.
What we tested
We looked for days where the Nasdaq-100 gained at least 1% while the PHLX Semiconductor Index finished negative.
There were 63 such divergence events since 2000.
We then measured whether semiconductors outperformed the Nasdaq-100 over the following five and 20 trading days.
There was almost no short-term catch-up
Over the next five trading days, SOX underperformed the Nasdaq-100 by an average of 0.03 percentage points.
Semiconductors outperformed in only 44.4% of the events.
That is effectively no mean-reversion signal at all.
The divergence usually did not snap back quickly.
One month later was only slightly better
Over the following 20 trading days, semiconductors improved.
Relative performance averaged +0.39 percentage points.
The outperformance rate rose to 54.0%.
That is a mild improvement, but still not a strong edge.
If the setup produced a reliable catch-up effect, we would expect both the average relative return and hit rate to be much stronger.
Why the divergence can persist
Semiconductors sit inside the broader technology ecosystem, but they are not interchangeable with the Nasdaq-100.
Chip stocks can be reacting to inventory cycles, capital spending, export restrictions, demand expectations or company-specific news while software and internet stocks rally for completely different reasons.
That means a strong Nasdaq session does not automatically imply semiconductors are mispriced.
Sometimes the lag is information.
The takeaway
When semiconductors fall on a day the Nasdaq-100 rallies at least 1%, there has been no reliable short-term catch-up.
Across 63 historical events, relative performance was essentially flat over the next week.
By one month, semiconductors showed only modest mean reversion.
The divergence is interesting.
It has not been strong enough to treat as a standalone trading edge.
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