Tech Takes the Hit as Money Rotates to Defense

Heavy selling of technology stocks weighed on the Nasdaq, which retreated 4.5% for the week, ending 5.3% below the record high it set on October 6. The S&P 500 fell 1.9%.

A rotation away from AI-related stocks and chipmakers weighed on U.S. large-cap growth stocks, while relative strength in health care and traditionally defensive sectors lifted the value equity style. A growth benchmark finished the week down 5.0%, while its value counterpart climbed 0.9%. October has thus far lived up to its spooky reputation for market uncertainty.

Beneath the surface, sector performance points to a much more cautious tone. For the full year, energy and technology still lead the pack, with both sectors up more than 20%. However, in October thus far, energy has maintained its lead but has been followed by defensive areas such as consumer staples, health care and utilities. Technology has been the worst performer for the month, falling into negative territory.

Oil, Yields and Global Chip Pressure

The decline in oil prices seen since mid-September reversed course, with U.S. crude rising more than 8% for the week and back above $100 per barrel on Friday. The shift came amid uncertainty over Middle East supplies and a larger-than-expected withdrawal from U.S. crude stockpiles. Even with the latest price rise, U.S. crude remained below a recent high of nearly $106 set on September 15.

Yields of longer-dated U.S. Treasury debt fell for the second week in a row, with the 10-year Treasury ending the week at 5.08%, down from 5.24% the previous week. The 30-year yield was also down sharply at 5.43% from 5.60%. In contrast, shorter duration yields fell modestly, with the 2-year Treasury at 4.72% versus 4.79% the prior week.

The major South Korean stock index dropped more than 14%, with the weekly sell-off driven largely by declines in the shares of the nation’s chipmakers and AI-related stocks. As of Friday, the index had fallen almost 38% since June, when it reached a record high.

Support Levels and the Snapback Setup

Technically, the sharp slide on Friday left the indices near key chart support levels and put them in a vulnerable position for additional downside tests, should those levels be immediately violated. However, on a short-term basis the indices appear somewhat oversold, with the SMH (Semiconductor index) down 9 days in a row.

If they are unable to snap back early next week, current downside momentum could violate near-term support and extend the slide even further to a more deeply oversold condition. If that does occur, we’ll be looking for oscillator and intraday tick levels to reach deeper extremes to set up a stronger snapback retest rally.

Key technical levels to watch this coming week appear to be S&P 500 (SPX) support near 7,515-20, 7,500-07 and, if violated, possibly 7,300-15. Chart resistance is seen near 7,550-55, 7,790-7,800 and the 7,820-45 zone. For the Nasdaq 100 (NDX), support is near 28,750, 28,200 and possibly 27,175-200, with resistance at 29,865-900, 30,500-600 and 31,500-700.

In any case, as we always do at TheTechTrader.com, we will “Trade What We See, Not What We Think.”

HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

Record Highs on Tuesday, Small Caps Left Behind

A strong start to the week lifted the S&P 500 and the Nasdaq to record highs on Tuesday. Neither index was able to push its record higher as the week progressed, but both finished around 1% higher overall.

The Russell 2000 small-cap stock index underperformed for the week, extending a recent run of lagging results amid concerns about elevated interest rates. At Friday’s close, the Russell 2000 was down a cumulative 5.7% over the past five weeks, versus a 1.0% gain over that period for a U.S. large-cap index.

AI Concentration, Bond Yields, and What the Fed Is Signaling

AI has transformed market leadership, with a handful of mega-cap companies driving an outsized share of returns and market value. That concentration is both a strength and a potential vulnerability. While correction risks are rising as the cycle matures, growing profits and a Fed that may be looking to tap the brakes rather than slam on them suggest the bull market may still have room to run.

In the wake of recent bond market volatility, yields of 10-year and 30-year U.S. Treasuries were slightly lower overall for the week but remained near their highest levels in more than two decades. At Friday’s close, the 10-year yield was 5.24% and the 30-year was 5.60%. The 2-year Treasury fell to 4.79%, down from 4.84% the previous week.

Oil traded in a relatively narrow range for the second week in a row, a marked shift from the price volatility seen since Middle East tensions escalated in March and April. On Friday afternoon, U.S. crude was trading around $91.50 per barrel, up fractionally from a week earlier. As recently as mid-September, oil was trading as high as $105. In early April, it traded as high as $115.

Wednesday’s release of minutes from the latest Federal Reserve meeting showed that policymakers anticipate possibly raising interest rates again before year end, though it was unclear how soon such a raise might come. The Consumer Price Index report scheduled for release this Wednesday will provide a major data point for the Fed ahead of its policy meeting later this month. The most recent CPI report showed inflation at a 3.4% annual rate in August, unchanged from the previous month and still well above the Fed’s 2.0% target.

Key SPX and NDX Technical Levels to Watch

SPX support near 7,730, 7,615, and 7,500-07. Chart resistance appears near 7,844 and 7,890, with a possible extension to 8,000-8,040.

Nasdaq 100 support near 30,500, 30,150, 29,850, and 28,750. Resistance at 31,360 and 32,400.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

Tech Carries the Market as Yields Surge to Levels Not Seen Since 2002

Strong performance from technology stocks lifted the Nasdaq to a fractional weekly gain, and the index outperformed the other major U.S. indexes for the sixth week in a row. The S&P 500 ended fractionally lower for the week.

The U.S. stock market closed out the third quarter with mixed September results. Gains from many of the biggest technology stocks helped the Nasdaq outperform, with the index rising 1.9% while the S&P 500 fell 0.5%.

The week produced another volatile performance for bond investors, as yields of some government bonds briefly touched their highest levels since 2002 before modestly retreating. Shorter duration yields finished the week broadly flat, with the 2-year Treasury ending at 4.84%. Longer duration yields rose, with the 10-year Treasury at 5.28% and the 30-year at 5.63%.

Mortgage Rates Post Biggest Weekly Jump in Four Years

Amid elevated bond yields, the average 30-year mortgage rate posted its largest weekly increase in four years, jumping to 7.28% from 7.03% the previous week.

Following Friday’s worse-than-expected jobs report, bond trading reflected investor expectations that the Federal Reserve is likely to hold its benchmark rate unchanged at its October 28th meeting rather than lifting it for the second meeting in a row. Trading in rate futures markets implied a roughly 79% probability that the Fed would hold steady, versus a 21% probability of a quarter-point hike, according to CME FedWatch. A week before the jobs report, trading implied a 64% probability of a rate hike.

My Technical Read: Key Resistance Still Has Not Been Cleared

Despite the S&P 500 snapping back Thursday and Friday, it still has not punched through key overhead resistance in the 7,780-7,815 zone. Clearing that convincingly at a minimum would be necessary before we could see a run at 8,000. Chart support now sits near 7,615, 7,500, and 7,313.

On the Nasdaq 100, resistance is near 31,000-31,015, with 33,000 potentially coming into play above that. Support appears near 29,935 and 29,370. Below that, key support sits at 28,900.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

Yields Hit Multi-Decade Highs While Equities Stay Resilient

Global interest rates continue to push higher in the face of inflation risks, robust growth, and hawkish central banks. These forces pushed U.S. Treasury yields to new multi-decade highs last week, with the 10-year U.S. Treasury note briefly touching 5.20% while the 30-year closed just shy of 5.5%.

Equity markets were impressively resilient in the face of this spike. Beneath the surface, however, higher rates sparked another rotation in leadership, as large-cap stocks outperformed smaller companies and international equities. Large-cap stocks, particularly those in the tech sector, held up well given strong balance sheets and solid growth profiles, while small-cap stocks lagged given their tendency to carry more debt and greater sensitivity to interest rate moves.

The Nasdaq climbed to a record high on Tuesday, eclipsing a previous peak reached in early June, before pulling back modestly on Wednesday. By Friday’s close the Nasdaq finished 2.1% higher for the week and the S&P 500 gained 1.2%.

Oil Eases, Housing Feels the Pain

An apparent easing of tensions in the Middle East conflict sent oil prices lower, with U.S. crude down to roughly $92 per barrel on Friday afternoon. As recently as September 15, oil traded as high as $106. The year-to-date peak came in early April at $113.

Inflation worries and the Fed’s latest interest rate hike continued to weigh on the U.S. housing market, as the average 30-year fixed-rate mortgage surpassed 7.00%. Freddie Mac reported the previous week’s average had reached 7.03%, the highest since January 2025. A subsequent daily survey by Mortgage News Daily found the average had climbed further to around 7.45% as of Friday.

My Technical Read: A Breakout That Still Needs Follow-Through

Last week saw a breakout of the six and a half week five-wave declining channel, but the move failed to follow through and take out the all-time high set August 13th at 7,816.70. We will be looking to see if the coming week results in a new high or whether resistance is formidable enough to keep prices contained for now.

Key SPX and NDX Technical Levels to Watch

SPX resistance near 7,780, 7,816, and 7,985-8,000. Support appears near 7,665-70, 7,550, and 7,500-07.
NDX resistance at 30,770 and 31,950-32,000. Chart support near 28,550, 28,200, and 27,300.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com