Morning update 5 November 2026 (EN): Complete divergence, Dow cheers, SOX cries, Europe relieved

What a session yesterday, after the results of the US midterm elections came in. We have seen just about every corner of the room. The Dow Jones jumped by more than 1,500 points, while the chip sector once again took a heavy blow. What strikes me most is how differently the reactions within the tech sector itself have been, with the Nasdaq 100 recovering and the SOX index sinking further. Of the 6 indices I follow closely, 3 are steadily creeping toward the top zone, 1 is behaving fairly neutrally, 1 is in correction territory and 1 is entering a 'bear market'. This complete divergence does not make today any easier, but I also see opportunities in it, especially in the laggard. Rebounds of 3% to 5% are normal after big declines like this in the SOX.

Election night lifts Wall Street, chips fall out of tune

The Democrats have won both the Senate and the House of Representatives in the US midterm elections, a clear defeat for the Trump administration, which now sees its room for maneuver shrink considerably. On Wednesday Wall Street responded with 1 of its strongest sessions in a year and a half, with mainly the Dow Jones making a solid catch up.

Not every sector benefited equally from the relief rally. In Texas, Democrat Gina Hinojosa defeated incumbent governor Greg Abbott, after a campaign in which she was critical of the rapid expansion of data centers in the state. Analysts point out that building new data centers will therefore become more expensive and above all slower, a concern that immediately hit chip names such as Micron, Marvell and Nvidia.

The broad rally and the chip decline show how differently investors weigh the election result per sector. Traditional names and financials benefit from the prospect of less trade uncertainty, while the AI infrastructure chain looks more vulnerable to regulation at the local level. That tension between an optimistic broad market and a more cautious chip sector ran like a thread through the whole session.

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Dow climbs 3%, chip names lag behind

The Dow Jones closed 3.03% higher on Wednesday at 53,356 points, a gain of 1,569 points and the best session in a year and a half. The S&P 500 gained 1.58% to 7,688.6 points, the Nasdaq Composite rose 1.44% to 25,737 points and the Nasdaq 100 climbed 0.91% to 28,437 points. The Russell 2000 ended 1.58% higher at 2,857 points. The chip index SOX, on the other hand, fell 3.13% to 10,269 points, clearly the exception on an otherwise strongly colored day.

Apple stood out with a gain of 5.31% to $349.51, its best daily gain since May 2025 and a new record high. Investors increasingly treat the stock as a safe haven in tech, now that the AI infrastructure chain is under pressure. Qualcomm first rose along with the broad market, but gave up 7.5% in after hours trading after the company reported that handset revenue fell 26% to $5.1 billion and that it is gradually losing customers such as Apple.

Micron dropped 7%, Marvell 7.08%, SanDisk 7.91%, Nvidia 3.17% and Intel 3.77%, all caught up in concerns about data center regulation after the election result in Texas.

The US 10 year yield stands at 4.84% at the time of writing and the 30 year yield at 5.24%. Gold stands at $4,135, silver at $52.75 and bitcoin at about $80,600, with gold and silver clearly higher. Brent oil stands at $94.14 per barrel this morning, 0.5% lower, after the sharp decline on Wednesday.

The price gain at Apple and the fall at Qualcomm show that not every earnings season has the same effect, even though both stocks were still gaining along with the broad rally on Wednesday afternoon. The decline in memory makers and chip names fits the new uncertainty around data center construction that was already covered in the first block.

AEX and DAX rise sharply, chipmakers the exception

The AEX closed 1.30% higher on Wednesday at 1,136.3 points. The DAX gained 2.22% to 26,438 points.

Philips stood out with a gain of 6.54% to €27.38 within the AEX. ASML, on the other hand, had to give up 3.42% to €1,337.60 and ASM International lost as much as 5.06% to €683.60. Within the DAX, Deutsche Bank gained 6.88% to €32.56, while Infineon gave up 4.12% to €50.24 and Siemens Energy lost 7.95% to €119.46.

The European chip names thus follow the American sector, with ASML, ASM International and Infineon all clearly lagging the broad rally. Financial and defensive names such as Philips and Deutsche Bank benefit from the election relief on Wall Street.

Agenda and outlook for today

US futures point in mixed directions on Thursday morning. Dow Jones futures again indicate higher, those on the S&P 500 are somewhat lower and those on the Nasdaq 100 indicate a negative open. In Europe the DAX future is higher, while the AEX future hovers around break even.

This afternoon at 14:30 our time the US Department of Labor publishes the number of new jobless claims, with an expectation of 196,000 against 194,000 the week before. At the same time the preliminary figures on productivity and unit labor costs for the 3rd quarter follow.

Quarterly results today before the open come from, among others, ConocoPhillips, Parker-Hannifin, Southern Company, Duke Energy and Cigna, and after the close from, among others, Cloudflare, Airbnb, Monster Beverage, Lumentum and EOG Resources.

My view on today, complete divergence after election night

What a session yesterday evening, after the results of the US midterm elections came in. As the saying goes, we have seen just about every corner of the room. The Dow Jones jumped by more than 1,500 points, the Nasdaq 100 also did reasonably well, but the SOX took another considerable blow. Everywhere people were looking for a clear direction, especially in the traditional sectors and in the chip names.

For me that is mainly because investors now count on the tariff drama under Trump moving a bit out of the spotlight, and a further escalation of the trade war becoming less likely. Brent oil meanwhile dropped by some $10, while gold and silver gained ground. The S&P 500 and the Nasdaq 100 rose firmly, but the SOX went straight in the other direction, mainly because of new doubts about the expansion of data centers in the United States, something the Democrats are more critical of.

A few weeks ago it was still almost a party for nearly all chip names, with price targets far higher than when they were near the top. Now the SOX stands almost 30% below the record of June, and some 22% below the top of 6 October. It is a bit of a search for the right way, because you stand at a crossroads and do not immediately know which way it will go. Going long on the Dow after such a strong day does not feel logical to me, and going short remains difficult too. That is why I prefer to look at the laggard, the SOX, which seems due a technical recovery of perhaps 3% to 5%, which can offer a nice bonus. Our members have already received a few things with the strategy I apply to this.

Of the 6 indices we follow closely, 3, the AEX, the DAX and the Dow Jones, are steadily creeping toward the top zone. 1 index is in correction territory and 1, the SOX, is already in a 'bear market'. The 6th index (S&P 500) does not yet show a clear picture at the moment. This complete divergence does not make it easier, but we will certainly get through it, there will be plenty of opportunities toward the end of this year.

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The psychology behind this market

A rally driven by relief over an election result, while a whole sector goes down in the same session, is a textbook case of cognitive dissonance. Investors then hold on at the same time to the idea that the market is strong and to the evidence that an important part of it is sinking, without letting go of either conviction right away.

From my coaching role at Guy Systeem Trading I recognize this pattern more often after a news driven session. Anyone who only looks at the average index figure quickly misses that the reality underneath sometimes moves in the opposite direction. It therefore remains wise to take diversification and divergence as seriously as the headlines at the top of the screen.

Technical picture AEX

This week the AEX once again tested how solid the ceiling above the market is. The index closed on Wednesday at 1,136.3 points, after the price had earlier in the day come close to 1,140 and then dropped back. Below the price the SMA-50 at 1,118 still holds firm as support, with 1,123 as a nearer safety net. The EMA-20 at 1,131 sits just below the closing price. The Bollinger Band pushed upward, a sign that the climb of the past weeks went quite fast.

Click on the chart to view it at full size.

In short.

Since the spring the AEX has been moving in a clearly rising price channel, with generally higher tops and higher bottoms. The price drops back again after a test of the resistance at 1,148 points at the end of last month, and for now cannot get above it. The SMA-50 at 1,118 meanwhile holds well as support, as does the level at 1,123.

For the coming sessions a new attempt toward 1,148 is the obvious scenario, as long as the support at 1,123 stays intact. A close below 1,115 would weaken the short term picture.

Technical picture Nasdaq 100

The Nasdaq 100 keeps looking for a bottom after the solid correction of the past weeks. The index closed on Wednesday at 28,437 points, a step back up to above the resistance at 28,200 after days of selling pressure. The SMA-200 at 27,970 is still just holding, while the EMA-20 at 29,272 and the SMA-50 at 29,738 sit well above the price. Above the price, first 28,900 awaits as the 1st resistance, with 29,700 as the next hurdle.

Click on the chart to view it at full size.

In short.

The Nasdaq 100 is in the middle of a solid correction within the longer rising trend, with a clear lower top in October. We see a rebound from the support at 28,200, with the SMA-200 at 27,970 as the next safety net below.

For the coming sessions a test move toward the SMA-50 at 29,738 is the obvious scenario, if the support at 28,200 stays intact. A close below the SMA-200 would weaken the picture and shift attention toward the support at 26,180.

Technical picture SOX

The SOX index showed on Wednesday how unevenly this trading day was distributed. The chip index closed on Wednesday at 10,269 points, 3.1% lower, and thus below all 3 averages. The EMA-20 at 11,269, the SMA-50 at 11,797 and the SMA-200 at 10,820 all sit above the price. The index now stands almost 30% below the record of 14,655 points of 22 June, with 10,450 as the nearest resistance from the current level.

Click on the chart to view it at full size.

In short.

The SOX remains in a clear downward trend within the longer rising line of recent months, with a lower top in October after the peak of June. The price still does not get back above the SMA-200 at 10,820, and dropped below it again on Wednesday.

For the coming sessions a technical reaction from the support around 10,000 to 10,250 remains possible, although given the weak indicators that is not yet a given. A close below 10,000 would weaken the picture further, while a return above the SMA-200 would ease the pressure. With this index a recovery can happen very fast. 5% to 8% is quite possible with such an index. 3% to 5% we can expect after the recent decline.