By Jared Blikre

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) have been stuck for months. Underneath them, $3.2 trillion has rotated between the "Magnificent Seven" and chip stocks outside Nvidia (NVDA).

The Magnificent Seven have added about $1.5 trillion in market value in July. Meanwhile, semiconductor stocks excluding Nvidia have erased nearly $1.8 trillion.

Those giant moves have largely canceled each other out at the index level.

The S&P 500 has spent more than two months bouncing between support and resistance after first entering the range in early May, as the chart shows.

The Nasdaq Composite has been moving similarly over the same stretch, while the Dow (DOW) has barely budged in July, even as Apple (AAPL), Goldman Sachs (GS), and Chevron (CVX) have broken away.

The rotation is broader than a handful of megacaps.

Forty-four of 51 software stocks in the Yahoo Finance industry basket are positive in July, with a median gain of roughly 6%. Only a handful of 62 semiconductor stocks are higher — including Nvidia and Broadcom (AVGO) — with the median chip stock down nearly 20%.

That gap has widened even as software has shown its own weak spots. IBM's (IBM) historic plunge exposed pressure on corporate technology budgets, but the group has still held up far better than chips.

Memory stocks have taken the hardest hit. Micron (MU), Samsung (005930.KS), and SK Hynix (SKHY) recently dragged memory stocks into a bear market after months of increasingly aggressive trading activity.

"There's some similarity between the ARKK rush in 2020 and the [semiconductor and memory stock] rush today," Strategas ETF strategist Todd Sohn wrote in a note to clients. "Both saw elevated volumes and flows before eventually settling down."

Semiconductor ETFs are now trading more than $40 billion per day, up from $9 billion a year ago, according to Strategas data. Sohn also estimates that semiconductors have approached 18% of the S&P 500, historically rare territory.

The next test arrives with Big Tech earnings.

The companies gaining market value now have to justify the move. The chipmakers losing it get a chance to stop the slide.

The S&P 500 and Nasdaq cannot stay inside these ranges forever. Earnings could decide which side finally breaks.

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.

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