Overview
- Barclays, which issued its advisory on Friday, said its proprietary equity timing indicator is deep in sell territory and recommended buying put options on the S&P 500 or semiconductor ETFs as protection.
- Semiconductors now account for roughly 19% of the S&P 500 and, when combined with technology hardware, push that concentration above 30%, making the index more dependent on a small group of chip and hardware firms.
- Barclays pointed to Broadcom’s disappointing forward guidance and the ensuing selloff in chip stocks as the immediate trigger that could roll through correlated tech holdings and exchange-traded funds.
- Goldman Sachs partner Bobby Molavi warned that investor optimism has outpaced caution after the S&P 500 recorded 11 new highs in May, suggesting prices may be diverging from underlying fundamentals.
- Barclays cautioned that hedges become more costly once many investors rush to buy protection, so it advised purchasing puts now to limit losses if a narrow tech downturn raises correlations and overall market volatility.