by Jason Bodner
June 30, 2026
In 1892, German surgeon Julius Wolff made a fascinating discovery: Bones aren’t static structures, they are alive. When subjected to stress, microscopic fractures often form. But instead of just healing, the bones rebuild denser and stronger than before. So, stress isn’t the problem…. It’s a growth opportunity.
Orthopedic surgeons named this syndrome after its founder, Wolff’s Law, namely “bones that never face stress become weak. Bones under stress are more likely to become stronger.”
The technology sector on Wall Street just experienced its own version of Wolff’s Law.
From the March low to the June 2 peak, the NASDAQ Composite rallied by more than 30% in roughly 60-trading sessions. Markets don’t move in straight lines forever, of course. Every strong advance eventually needs a pause. Gains get digested, and some enthusiasm gets shaken out. That’s healthy and necessary.
Last week, that’s exactly what happened. NASDAQ pulled back roughly 6.4% from its recent high, while the NASDAQ 100 fell about 4%. Right on cue come the fear and explanations. AI enthusiasm is fading. Valuations are stretched. Inflation remains stubborn. The Iran war, which looked settled two-weeks ago, is back in the headlines after a cargo ship was struck near Oman, briefly sending Brent crude above $80.
Every correction comes with a brand-new reason why “this time is different,” but the data disagrees.
Looking at similar setups since 1990, NASDAQ has experienced 228-pullbacks of between 4.5% and 8% after previously rallying by at least 15%, excluding genuine crisis periods. This week’s setup fits the pattern almost perfectly. What followed those moments is worth studying a bit closer. One-month later, the NASDAQ was higher 78% of the time, averaging 3% gains. Three-months later, it was positive 91% of the time, up roughly 12%. Six-months out, the win rate climbed to 94%, with gains approaching 20%.
And one year later? Across all 228-instances, the NASDAQ finished higher every time, averaging +33%!
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Naturally, that’s not a forecast or a guarantee of a repeat in 2026, but it’s the historical baseline. Base rates deserve more respect than whatever narrative dominates the headlines in any given week.
The money flows I follow reinforced that read. Our 25-day Big Money Index (BMI) climbed to 65.1% by Thursday, its highest reading in three-weeks, even while the NASDAQ fell in four-consecutive sessions.
Prices were moving lower, but the underlying money flows were quietly improving.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Historically speaking, divergence like that means repositioning, not running for cover.
The sector rotation confirms it. Healthcare attracted the strongest inflows of the week by a wide margin, led by clinical-stage biotechnology and specialty pharmaceutical companies. Financials were close behind, with buying spread across banks, insurers, and capital markets firms.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Technology was modestly negative overall, but the details matter. Investors weren’t abandoning AI. They were getting selective. The most crowded names experienced selling while semiconductor and networking infrastructure companies continued attracting buyers.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Then came one of the week’s most telling earnings reports; Micron Technology, the world’s largest memory chip maker reported quarterly revenue of $41.5-billion, up 346% from a year earlier, with gross margins of 84.9% surpassing both Nvidia and Meta. Earnings beat estimates by 23%. Guidance for next quarter called for $50-billion in revenue, nearly $7-billion above Wall Street’s expectations. And high-bandwidth memory products are fully booked through 2027.
The ripple effect hit consumers the same day. A major technology company announced price increases of $100 to $300 on laptops and tablets, saying it had never seen component costs rise this much, this quickly.
The AI boom isn’t softening. It’s arriving in terms of both earnings and price tags simultaneously.
There was rotation this week, but it looked healthy. Over-extended names cooled off, but companies with real earnings, solid cash flows, and business momentum kept attracting buyers. Healthcare and financials led the way, while semiconductors held steady. This doesn’t resemble a market bracing for trouble. It looks like a bull-market becoming more disciplined. That’s what healthy advances tend to do.
Examining Seasonality: Monthly Trends + Mid-Term Presidential Years
Seasonality adds one more reason not to overreact. June has historically been one of the flattest months of the year, while July has consistently been one of the strongest, producing average gains approaching 1.5%, with positive returns roughly two-thirds of the time.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
There’s another historical lens worth adding here, one arriving at a remarkably similar conclusion from a completely different direction. I am referring to the history of mid-term election years, since 2026 is as a midterm election year. Mid-term years have the worst reputation in the four-year presidential cycle, averaging just 5.8% total returns since 1926 and punishing intra-year draw-downs averaging 16%.
The first nine months tend to be choppy, frustrating, and full of reasons to give up. Sound familiar?
But the crowd consistently forgets any election uncertainty in the fourth-quarter, when mid-term years historically snap-back hard. Since 1926, the S&P 500 has averaged a 7% gain in Q4 of mid-term years alone, with an 88% positivity rate. And since 1950, the market has averaged 36% one-year returns!
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
That kind of juice is exactly what the NASDAQ’s 228-instance pullback study produced from a completely different methodology. Two independent historical frameworks, arriving at nearly the same number. That kind of convergence is worth paying attention to.
The choppy front half of a mid-term year might finally be here. The lows may or may not be behind us, but history suggests the direction of least resistance from here is higher. Mid-term years have a way of exhausting the skeptics and rewarding the patient. Q4 could deliver gains dwarfing any short-term losses.
Here’s the deal: A 30% market sprint earlier this year demanded an imminent breather. It came on schedule, dressed in fresh headlines designed to make it feel like something worse than a pause. Neither flows nor data support the fear story. And earnings coming out of AI infrastructure don’t support it either.
Wolff’s Law says stressed bones grow back stronger. History says the same about bull market pullbacks.
“What doesn’t break you makes you denser.” – Julius Wolf
Bend – don’t break.
Navellier & Associates; own Nvidia (NVDA), Micron (MU), Apple (AAPL) and Meta Platforms Inc Class A (META) in managed accounts. Jason Bodner owns Nvidia (NVDA), Micron (MU), Apple (AAPL) and Meta Platforms Inc Class A (META) personally.
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Are We Headed into Space – Or Is “Space” Headed Here?!
Income Mail by Bryan Perry
Decoding Big Tech’s $600 Billion Bet: Is it a Mad Gamble or a Master Plan?
Growth Mail by Gary Alexander
Beware Mid-Term Election Years (But Celebrate What Follows)
Global Mail by Ivan Martchev
The Revenge of the 493
Sector Spotlight by Jason Bodner
Stress Builds Strength – In Humans and in the Markets
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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