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Chip sector tumbles, Dow stays afloat

What a session yesterday, one of the wildest I have experienced in a long time. All 3 major US indices lost heavily, but the Nasdaq took the biggest hit with a plunge of 5.5%. The Nasdaq 100 gave up more than 6% and the SOX even more than 12%, the hardest blow for those last 2 since the coronavirus panic of March 2020. We also had to absorb a hit yesterday and were forced to close a series of positions, even before the indices fell much further. In some sectors it even looked like a real crash, especially the chip index, which now stands 38.5% below its June peak. The Nasdaq 100 has entered correction territory, with a decline from the peak of 15.1%. Today is the last session of the week and I am curious whether the market can recover a bit, certainly with some indices now quite oversold. This afternoon at 14:30 our time the US jobs report follows, and after that only the weekend remains, where we can and must find some rest.

The selling wave spreads from chips to the whole market

The sell-off in chip and AI stocks that began on Wednesday continued on Thursday into the rest of the market. All 11 sectors of the S&P 500 closed in the red, with technology the biggest loser. Investors fear that this week's election result, with big gains for the Democrats, will lead to stricter regulation on the construction of new data centers.

The fear gauge VIX shot up to 28.2 points during the session, the highest level since the end of March. According to some analysts, about 30% of the data center expansions planned for 2028 are now under pressure. Traders also lowered the odds of a Federal Reserve rate move in December, from more than 82% to a little over 70%.

A selling wave that starts in 1 sector and hits the whole market within a day shows how heavily chip and AI names now weigh in the most important indices. The combination with a risen fear gauge points to a market that is not only repricing one sector, but is also taking another look at the broader growth story, once again.

Nasdaq in correction, SOX has its worst day since 2020

The Dow Jones closed 3.44% lower on Thursday at 51,523 points, a loss of 1,833 points and so almost the entire rally of Wednesday gone again. The S&P 500 lost 4.36% to 7,354 points, the worst session since April 2025. The Nasdaq Composite dived 5.52% to 24,315 points and fell below the SMA-200 for the first time since April, the sign of an official correction. The Nasdaq 100 gave up 6.36% to 26,630 points and the Russell 2000 lost 4.45% to 2,730 points. The chip index SOX took the hardest blow with a plunge of 12.25% to 9,011 points, the worst 1 day decline since mid March 2020.

Nvidia lost 9.26% to $181.60, Broadcom 10.43%, Intel 10.33% and Micron even 17.46%. AMD dropped 17.26% and Arm 13.08%. Qualcomm still lost 9.49% despite earnings above expectations, after revenue from phone chips fell 26% to $5.1 billion due to weak demand and less business with Apple. Tesla gave up 10.77%. AppLovin was the exception with a gain of 31.04%, after results well above expectations.

The 10 year yield stands this morning at 4.83% and the 30 year yield at 5.25%. Gold trades at $4,055, a decline of about 1.4%, and silver at $51.5, about 1.5% lower. Bitcoin hovers around $75,400 and so remains under pressure. Brent oil stands this morning at $99.5 per barrel, a rise of about 1%, a first recovery after the heavy fall earlier this week.

The difference in size between the declines in the broad indices and in the SOX confirms that the chip sector by far absorbs the hardest blows. The fall of the Nasdaq below the SMA-200 also gives a technical signal that goes beyond the sentiment of 1 session.

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AEX and DAX hold up fairly well under chip pressure

The AEX closed 0.62% lower on Thursday at 1,129.2 points. The DAX lost 0.43% to 26,325 points, a lot milder than the US session later that day.

ASML gave up more than 6.5% and ASM International almost 7%, both clearly hit by the international chip sell-off. On the DAX, Infineon fell back even harder by about 8.5%. Adyen on the other hand went against the tide and gained more than 4.5%, as a beneficiary of the rotation away from chip names toward other technology companies.

Europe closed well before the heaviest US losses of that afternoon, which explains the difference with Wall Street. Still, the split is already visible in yesterday's figures, with ASML, ASM International and Infineon sharply lower while Adyen and DSM benefit from the rotation.

Agenda and outlook today

US futures point mixed on Friday morning. The future on the Dow Jones is sharply lower, the one on the S&P 500 trades flat and the one on the Nasdaq 100 is quite a bit higher. In Europe the futures on the DAX and the AEX are about 1% lower.

This afternoon at 14:30 our time the US Department of Labor publishes the jobs report for October, the most important agenda item of the day.

Quarterly results today come from, among others, Humana, Charter Communications and Moderna.

My view on today: heavy session and a new chance for the SOX

What a session yesterday, for me 1 of the wildest in a long time. All 3 indices lost heavily, but the Nasdaq took the brunt with a decline of more than 5.5%. The Nasdaq 100 even lost more than 6% and the SOX more than 12%. For the Nasdaq 100 and the SOX it was the worst 1 day decline since 16 March 2020, in the middle of the coronavirus panic, and for the Nasdaq Composite the worst since 4 April 2025.

We also had to absorb a blow. We were in a series of LONG positions that I was forced to close, and after that the indices fell much deeper. At some point I got back in with a few technology positions. It started to look like a crash in some indices, especially the SOX. It was already in 'bear market' territory, so more than 20% below the peak, and now stands 38.5% below the peak.

The scenario I had outlined is now coming true. I said we would get a decline of 40% in the sectors that had run up too far, and the SOX is now close to that. The most striking thing is that I unfortunately missed that decline and had to accept losses on the last round of positions. I had still counted on a rebound at first and it did not come. The decline went so fast that it was very hard to step in on time, but I did so to prevent further losses. Anyway, you must be able to bear losses on the stock market too, you make choices and then something unexpected can always happen, as was the case yesterday.

Today is the last session of the week and I am curious whether we can recover a bit. This afternoon at 14:30 we get the employment figures and then we head toward the weekend. The fact is that certain indices are now quite oversold.

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The psychology behind this market

A session in which all 11 sectors fall at the same time is a textbook example of herd behavior. As soon as 1 group of names comes under pressure, investors not only sell those names, but also start reducing positions elsewhere, purely because others do the same. It is rarely a new, individual analysis behind such a broad move, but mainly the pull of the crowd.

From the coaching role at Guy Systeem Trading this pattern is regularly seen after a news driven day with a sudden spike in the fear gauge. Those who are aware of it do not need to run with the crowd and can instead look at where the reaction has been exaggerated. Discipline and a plan of your own remain the best counterweight to the pull of the herd.

“A herd only feels safe once everyone runs out the door at the same time, even if that door is much too small for so much haste.”

Technical view Dow Jones

The Dow Jones gave back a good part of the election rally on Thursday. The index closed at 51,523 points, after the price still reached almost 53,711 in the morning and then sank all day. With that the price slid below the cluster of the EMA-20 at 52,130 and the SMA-50 at 52,110, which now acts as resistance above the price. The SMA-200 at 50,665 remains the deeper safety net. The Bollinger Band has clearly widened in recent days, a sign of increased unrest.

Click the chart to view it in full size.

In short. The price fell below the EMA-20 and the SMA-50, which now act as resistance above the price.

The MACD fell below the signal line and the momentum is clearly negative.

The SMA-200 is still well below the price, so the longer trend remains intact.

The RSI stands at 45, neutral and not oversold, so there is still room in both directions.

On the longer daily chart the Dow remains in a rising trend, with the SMA-200 still well below the price. The price is now not above the cluster of the EMA-20 and the SMA-50 at 52,100 and sinks below it again today, while the round level of 51,000 comes into view as the next support.

For the coming sessions a test of the support at 51,000 is likely, with the SMA-200 at 50,665 as the next safety net. A return above the cluster at 52,100 would instead ease the pressure.

Technical view Nasdaq 100

The Nasdaq 100 took a heavy knock on Thursday and closed at 26,630 points, for the first time in a long time below the SMA-200 at 27,977. The EMA-20 at 29,021 and the SMA-50 at 29,686 are now also far above the price. The closing price is even below the lower edge of the Bollinger Band, a rarely stretched move that points to a strong oversold condition.

Click the chart to view it in full size.

In short. The price trades below all 3 averages and even below the lower edge of the Bollinger Band.

The MACD and the momentum are both firmly negative, with a rising histogram.

The SMA-200 is lost for the first time in a long time and now acts as resistance.

The RSI stands at 27, oversold, which increases the chance of a technical reaction.

The Nasdaq 100 is in the middle of a solid correction within the longer rising trend and now clearly looks weaker after losing the SMA-200. The price does not get above that level at 27,977 yet and sinks further below it, with 26,600, Thursday's low, as the next support.

For the coming sessions a technical rebound toward the SMA-200 at 27,977 is likely, given the strongly oversold indicators. A close below 26,600 would weaken the picture further.

Technical view SOX

The SOX went through its worst day since mid March 2020 on Thursday and closed 12.25% lower at 9,011 points, well over 38% below the record of 14,655 points of 22 June. The price now stands deep below all 3 averages, with the EMA-20 at 11,054, the SMA-50 at 11,745 and the SMA-200 at 10,824. Here too the price closed below the lower edge of the Bollinger Band, a very stretched move.

Click the chart to view it in full size.

In short. The price cracked 12.25% lower and closed below all 3 averages and below the lower edge of the Bollinger Band.

The MACD and the momentum remain firmly negative, with no sign of a positive divergence.

The RSI stands at 26, deeply oversold, which increases the chance of a technical reaction.

The SMA-50 remains above the SMA-200, so there is no 'death cross' yet.

The SOX remains in a clear downtrend since the June peak and accelerates that trend today with a capitulation like session. The price does not get above the round level of 9,600, the lower edge of the Bollinger Band, yet and sinks far below it today, with the low at 8,997 as the next support.

For the coming sessions a technical recovery is likely, given the deeply oversold indicators, although that changes nothing about the underlying downtrend. A close below 8,997 would weaken the picture further.