Nasdaq 100's Hidden Weakness: Nearly Half in Bear Market Territory

The Nasdaq 100 index has been steadily climbing in recent times, but a closer look reveals that nearly half of its members are currently trading at least 20% below their respective peaks.

This threshold traditionally qualifies as bear market territory for individual stocks, and the high proportion of 48% is the highest since March. The few strong performers are carrying the many, masking the fact that approximately half the index is in deep drawdowns from its peaks.

The semiconductor sector has been a source of notable volatility, with names like Micron and Intel experiencing choppy trading in early to mid-July. Semiconductors sit at the intersection of several major investment themes, including AI infrastructure buildout, consumer electronics demand, and geopolitical supply chain concerns.

As a result, when chip stocks wobble, the ripple effects tend to be outsized relative to their index weight. Crypto markets and tech stocks have become increasingly correlated over the past few years, particularly Bitcoin and Ethereum with the Nasdaq. If this narrowing trend continues, it could create headwinds for crypto even if the Nasdaq 100 index remains near its highs.