Chip Stocks — Down 13% in a Week, Under the Floor That Held Twice; the Average Stock Barely Moved

1 · This Week's Action

The builders broke their floor; the average stock barely moved. Last week this letter told two stories. Story one, relative strength, held: health care is 14.9 points ahead of the S&P over a month, and the index of companies that use AI rose 0.7% and made a new high on Wednesday. Story two, a bottom, failed. The AI build-out index had held the zone between 1,704 and 1,735 twice. On Thursday it closed at 1,473.67 — under that zone, and under the 61.8% retracement of its 2026 rally at 1,559.55. It ended the week at 1,485.88, down 13.2%. The chip fund SOXX fell 13.1%; the equal-weight S&P, in which every company counts the same, fell 1.0%. §3 reads the indices. First, the tape.

The index. The Nasdaq 100 fell 4.91% on the week to 26,990 — under the July low close of 27,192, the shelf last week's letter named. It sits 13.6% under its October 6 record of 31,224. The fund closed at 656.10, 9.0% under its 50-day average and 3.6% under its 200-day. The S&P 500 fell 2.68% to 7,377, 5.7% under its record of 7,819; the fund closed at 735.29, 4.0% under its 50-day and 0.7% above its 200-day — the one long line it still holds.

Most of it came on Thursday. The Nasdaq 100 fund walked −1.4%, +0.6%, +1.0%, −6.5%, +1.4%; the S&P fund −0.5%, +0.3%, +1.7%, −4.4%, +0.3%; the chip fund −3.8%, +2.5%, −3.1%, −12.2%, +3.5%. Wednesday's election result lifted the S&P; Thursday's three blows to the AI builders took it back and more. §2 has the order.

The average stock held — a fifth week ahead of the index. The equal-weight S&P fell 1.04% to 216.05, still 0.6% above its 50-day and 3.7% above its 200-day, and +12.8% on the year against +7.8% for the S&P fund. On Wednesday it closed at 223.33, its highest close of the past year. Small caps fell 2.03%. The S&P without tech was flat, −0.03%; the Nasdaq 100 without tech rose 0.14%. And the giants were not the problem: the Magnificent Seven fund fell only 1.39% to 67.53, less than the S&P, because three of its members rose — Amazon +7.9%, Alphabet +1.8%, Microsoft +1.7%. The S&P without the Seven fell 3.46%.

Health care and staples against tech

The pattern held again: when tech falls, health care and staples hold. Tech fell 8.23% to 164.74; health care closed flat, −0.04% at 184.80; staples rose 0.74% to 90.08. Over one month: health care +10.6%, staples +10.1%, tech −18.5%. The tech fund is 18.4% under its October 6 record close of 202.00.

Against the S&P, the gap kept widening. Over 21 sessions health care is 14.9 points ahead of the index and staples 13.0; tech is 11.7 behind. Over 63 sessions: health care +14.6, staples +10.9, tech −6.7. A week ago health care led by 12.3 points over 21 sessions. It is a tendency, not a law — and for a second month it has been the one that paid.

The eleven S&P 500 sectors

Five of eleven up, and last week's high close of the year in energy gone in five sessions. Communication services +4.89% to 104.79, real estate +1.92%, discretionary +1.91%, financials +1.15%, staples +0.74%. The red: health care −0.04%, utilities −0.69%, materials −1.50%, industrials −2.83%, technology −8.23% and energy −12.00% to 61.62 — from 70.02 a week ago, as oil fell 12%.

Against the S&P. On the week: communication +7.6 points, discretionary and real estate +4.6, financials +3.9, staples +3.4, health care +2.7; tech −5.5, energy −9.3. Over 21 sessions: health care +14.9, staples +13.0, real estate +12.7, materials and financials +10.4, discretionary +10.2, utilities +10.0 — tech −11.7. Seven sectors are ten points or more ahead of the index over a month. One is almost twelve behind.

Breadth — health care broad, tech thin, energy empty. In health care 54 of 59 members closed above their 50-day average and 46 above the 20-day. In tech 22 of 72 are above the 50-day, 14 above the 20-day and 11 above the 5-day; 19 made a five-day low. In energy none of 21 members is above its 20-day or its 50-day. Financials sit in between: 46 of 76 above the 50-day.

The Nasdaq 100, cut six ways

The week: the Nasdaq 100 without tech +0.14%, the US top-20 fund −3.38%, the equal-weight Nasdaq 100 −3.68%, the Nasdaq 100 fund −4.98%, its 30 largest −5.91%, Nasdaq tech −8.44%. On the year: tech +16.5%, equal weight +9.5%, the index +6.8%, the 30 largest +5.6%, the top 20 +5.3%, ex-tech +0.8%. A week ago Nasdaq tech was up 27.2% for 2026. One week took more than a third of that away.

Momentum against low volatility — a fourth week of defence. Momentum fell 8.70%, low volatility rose 0.39%. The ratio fell from 141.3 to 128.5 indexed, against a trend line at 156.9, and the factor board reads below trend — a defensive rotation, low volatility leading.

The tech ETFs we carry

Three of twenty-one green. The chips and the AI baskets led the fall: the WisdomTree AI fund −13.09%, SMH −11.20%, cybersecurity −9.89%, the fabless fund −9.37%, XSD −8.01%, quantum −7.82%, cloud −7.74%. The green: video games +6.32%, lithium and batteries +1.84%, fintech +1.32%.

Software — under 100, but ahead of the chips. IGV closed at 98.88, down 5.19%, under the round 100 and 7.3% under its 50-day of 106.71 — still 5.1% above its 200-day. The software-to-chips ratio rose 6.8% on the week to 0.2131, 63% above its June low: software fell, the chips fell twice as far. The cloud fund closed at 25.85, 15.6% under the 2026 high it made on 26 October; cybersecurity at 91.04, 10.1% under its 50-day. In the names: Datadog −23.9%, Atlassian −19.8%, Okta −19.0%, Zscaler −16.9%, CrowdStrike −13.4% — and, gentler, Salesforce −6.8%, Adobe −4.4%, ServiceNow −3.0%.

The names in one line each. Up: Stryker +11.7%, Booking +8.5%, United Airlines +8.2%, Amazon +7.9% to 259.30, Royal Caribbean +6.5%, Tempus AI +5.3%, Alphabet +1.8%, Microsoft +1.7%. Down: Lumentum −35.9%, Marvell −28.1%, Western Digital −28.0%, Applied Optoelectronics −27.4%, Astera Labs −26.3%, Dell −22.6%, Micron −22.0% to 690.00, Nvidia −8.8% to 186.64.

The four indices

The S&P 500 −2.68% to 7,377, the Russell 2000 −2.62% to 2,738, the Nasdaq 100 −4.91% to 26,990. The Dow fell 0.94% to 51,286, after rising 2.3% on Wednesday alone, the day the election results came in. On the year, by the funds: small caps +11.2%, the S&P +7.8%, the Nasdaq 100 +6.8%. A week ago the Nasdaq 100 led the S&P for 2026; it now trails it.

The Treasury curve

The ten-year closed at 4.87% on the house sovereign board, from 4.93% — a second weekly close under 5%. The thirty-year closed at 5.27%, the two-year at 4.52%. The long bond rose 0.10% to 81.92, a third week above its 81.2 line; the 7–10-year fund rose 0.11% to 91.86.

A strong jobs report, and a lower ten-year. Friday's report showed 165,000 new jobs in October against about 60,000 expected, with unemployment at 4.1%. The Fed, under Chair Kevin Warsh, held its range at 3.75–4.00% on 28 October and decides next on 9 December, with new projections; on 29 October, before Friday's report, the futures put a December hike near 80%. The ten-year fell anyway. In a week when the chip index lost 12% in one session, the bond market looked past a strong report.

The dollar

The dollar fund closed at 29.13, +0.45% — level with its 12 October high close. The yen weakened from 157.55 to 158.43 per dollar.

Gold — back above the line

Gold rose 4.71% to 372.52 — back above the 364 support it lost a week ago. On the editor's chart the horizontal line near 364 held the summer lows; last Friday closed under it, at 355.78, the lowest close of the past year. This Friday closed 2.3% above it. The line near 441 stays the year's broken middle. Silver rose 5.09%.

Last week gold fell with the stocks. This week it rose while they fell — and while yields fell too.