Technology's Slide Stops At Seven

The S&P 500 Technology sector snapped a streak of seven straight lower closes yesterday, bouncing 0.98%. Over those seven trading days, the longest since another seven-day slide ending on September 6, 2022, the sector fell 5.15%. As shown below, streaks this long have been relatively rare. Since 1990, there have been only 22 other periods when the sector fell for at least seven consecutive trading days. The record was a 12-day streak ending in May 2012 in which the sector fell 9.7%.

The recent decline was also relatively mild compared with those earlier stretches. Technology fell an average of 8.93% during the previous streaks, with a median decline of 7.26%. The latest 5.15% drop was the sixth-smallest of the 23 occurrences and nowhere near the losses of more than 20% in 2000 and 2008.

Long losing streaks have typically been followed by a rebound, although not always immediately. The sector was higher one week later 77% of the time, with an average gain of 2.77%. Results were less consistent over the next month as the average gain improved to 5.77% but the consistency of gains slipped to 68%.

The longer-term numbers have been much stronger. Technology was higher six months after 20 of the 22 prior streaks and one year later in 19 cases. Average gains reached 17.19% and 28.26%, respectively. Seven straight losses caused some short-term technical damage, as the sector went from 1.94 standard deviations above its 50-DMA on August 13 to slipping below it after its seventh consecutive down day. History, though, suggests that extended selling streaks have more often become an opportunity than the start of a longer downturn.