What a day. After premarket trading pointed to a mildly negative open for many of the major domestic indices, the floor fell out from underneath growth-focused names as the morning rolled on. While the afternoon saw major benchmarks get their feet underneath them a bit, some heavy damage was still done across the board.
What a day. After premarket trading pointed to a mildly negative open for many of the major domestic indices, the floor fell out from underneath growth-focused names as the morning rolled on. While the afternoon saw major benchmarks get their feet underneath them a bit, some heavy damage was still done across the board. For this reason, we are including a supplemental article in today’s report discussing some of the action the analyst team noticed throughout the day.
We will start with the Nasdaq-100, which slipped as much as 6% on the day. Most of the damage was done by a massive decline for semiconductors. Representative SOXX shed as much as 11-12% for the day, quickly moving into heavily oversold territory on its default chart. Having recently moved into a negative trend, its fund score has moved down below what NDW would consider a technically defendable fund. This will be mission critical as we close out 2026, especially as further developments arise about possible AI buildout (or lack thereof) with the Democrats sweeping the House and Senate during the midterms. Zooming out of the semiconductor space, we can look back at the technical picture for NDX. This chart is included below. After consolidating for the better part of the last few months, 11/5’s breakdown sees NDX move back into a negative trend, posting its third consecutive sell signal in the process. This trendline had been in place since market action coming off the tariff tantrum lows. Moving past this trendline (and previous support around 27,200), the next major landmark comes around some old resistance from late 2025/early 2026 marked below. The break is certainly a negative development, but the analyst team wouldn’t advise making any rapid allocation changes immediately as we are now heavily oversold.
Based on intraday action (pulled around 2PM EST) the -5.86% day for NDX marks the 36th worst day ever, dating back to December of 1992. For context, that represents a .3% percentile day. From there, we pulled forward returns from those other large decline days and put together the table below. Buyer beware, the returns look quite miserable… and they are… but it is worth noting that over 20 of these “massive” decline days came around the dotcom bubble bursting. All that to say there is some heavy clustering affecting the average/median returns. Other notable declines came around the GFC and the Covid lows. Most recently, a similar decline was seen in April of 2025 as markets crumbled around the tariff announcement. All that to say, there is certainly a wide margin between your “winning” and “losing” years, and the dates clustered around some major historical market landmarks. Time will tell if the 2026 midterms will mark a similar historical turning point.
Of course, it is our job as money managers to remind our clients that pullbacks, even significant ones, occur from time to time. Even more important is the reminder that the difference between successful and unsuccessful investors is often slim… and clustered around how we react during large market exhales. The table below gathers performance data for NDX after pullbacks of different magnitudes off all-time highs. With intraday moves on 11/5, we now sit roughly 14.5% of all-time highs at 31,200. Of the 27 similar declines since 1992, NDX gained an average of ~30% in the year after. In fact, historically speaking, a pullback of this magnitude typically stops around here, only falling an additional 5% about a third of the time. In simple terms, remember not to let emotion prevent you from seeing the forest for the trees.
After today, there will undoubtedly be changes to key RS developments. The analyst team will monitor said shifts and bring them to your attention as needed. We will also closely monitor defensive triggers and highlight them if we see notable shifts you might want to be aware of. On your end, keep an eye on technical attributes and note important points of support and resistance you will need to monitor to stay on top of shifting RS.
