Analysis: After the chip stock sell-off, the historical probability of a rebound is nearly 70%, with an average 3-month return of +23.3%

November 7th, the Philadelphia Semiconductor Index SOX fell 12% this Thursday, and the S&P 500 dropped 4%, marking the second-worst single-day performance for SOX since its inception (the worst was in early March 2020 during the COVID-19 outbreak, and the third-worst was during the dot-com bubble). However, the sell-off did not persist on Friday, and the index has strongly rebounded by over 4%. Market sentiment is expected to further recover over the weekend.

Historical data from Deutsche Bank shows that after the past 9 worst trading days for SOX, the average returns over the following 3 months and 12 months were +23.3% and +48.8%, respectively, with positive returns in 6 out of 9 instances, indicating that significant rebounds often occur after such extreme sell-offs.