Nasdaq’s 3-Year Coincidence

Mental note to self: Sell all Nasdaq stocks on July 15, 2001.

For the third year in a row, the tech-dominated Nasdaq composite index hit a key peak in mid-July, then went into a steep slide.

This year the peak was on July 17, when the index closed at 4,274.67. It has fallen 11.4% since, through Friday--and was a lot worse a week earlier, before last week’s 3.4% rebound.

In 1999 Nasdaq reached its summer peak at 2,864.48 on July 16, then tumbled 13.1% by mid-August. That was the end of a major sell-off of Internet-related stocks, which weighed heavily on the Nasdaq index.

In 1998 the index peaked at 2,014.25 on July 20, then plummeted 25.5% by the end of August, in the wake of Russia’s debt default and rising worries about Asia’s ongoing economic crisis.

This year, one apparent trigger for Nasdaq’s slide of recent weeks has been growing concern about the health of the semiconductor-stock sector, one of the leaders in the technology market since last fall.

More investors are beginning to question whether the boom in demand for computer chips is slowing--and whether, even amid still-strong demand, increases in manufacturing capacity could begin to depress chip prices again.

The SOX semiconductor stock index has plummeted 27.3% from its recent peak of 1,266.39, reached on July 17.

Is it just a coincidence that tech issues have reached the mountaintop near the same date three years in a row? Apparently. Phil Roth, veteran technical analyst at brokerage Morgan Stanley Dean Witter in New York, notes that the stock market usually reaches a near-term peak in summer. It just so happens that the peak occurred in mid-July for the last three years, he figures.

Now that it’s been noticed, Roth quipped, “You can bet it’ll never work next year.”