Chip Stocks Fall Over 5% as Support Levels Offer a Potential Rebound

Technology stocks are selling off as earnings reversals and persistent selling keep investors on the defensive. The bigger concern is that falling 10-year yields are providing little relief to stocks, gold, or silver, while oil remains supported by conflict risk. SMH is down more than 5%, but its pullback is approaching conditions that could produce a technical bounce. The next session will help show whether buyers respond at support or selling continues into the weekend.

In One Minute

The market is struggling because brief rallies keep attracting sellers, especially in technology. SMH is approaching overlapping technical support with an oversold reading, creating a potential bounce opportunity even if selling continues first. At the same time, weakness in yields and precious metals raises concerns about pressures beneath the surface, while defensive stocks are attracting buyers. Watch $760.40 on the S&P 500 fund and $80,500 on Bitcoin, where support remains intact but increasingly tested.

The Context

Lower yields would normally help gold and silver, yet both are falling alongside technology shares. That disconnect raises the possibility of recession concerns, particularly with stocks failing to produce a strong recovery after their recent decline. I would expect consolidation under healthier conditions, and we are not seeing it yet.

Weekend risk is another part of the picture, especially after selling continued into the previous Friday’s close. The administration’s stated intention to hold off until after the midterms, followed by Tehran’s threat to attack during the midterms, adds uncertainty around the conflict with Iran. That exchange gives investors another reason to reduce exposure before the weekend rather than add positions.

Key Developments

The S&P 500 closed below its rising trend line after spending several sessions testing that boundary. On the S&P 500 fund, prices opened above the line, tried to hold it, broke lower, and then failed on an attempted recovery. The afternoon formed a bear flag, a pause after a decline that can lead to another move lower, before the final 10 minutes brought a rally.

The next horizontal support is $760.40, where I expect some bouncing and an attempt to recover above the level. An opening gap below it would leave the market vulnerable to renewed selling. The next major support is the rising trend line at $748.45.

The Nasdaq Composite (IXIC) fell 2.6% after spending the previous three sessions trying to establish itself above a descending trend line. That effort appears exhausted for now, with prices falling back toward the upper boundary of a rising parallel channel extending to April 2016. The channel contains most of the price action before the breakout above it in May.

Since that breakout, prices have repeatedly tested the channel boundary from above. The more often support is tested, the greater the risk of falling back inside the channel. If we gap below that boundary and continue trading within the channel, the next major support is 25,036 points.

The 10-year yield fell sharply instead of consolidating within the expected 5.021% to 5.289% range. It dropped below 5.21% and caught support along a descending trend line connecting the June 2007 pivot with the October 2023 pivot. The separate horizontal level at 5.289% marks the June 2007 high.

I had expected 5.021% to act as the near-term floor, making this decline concerning. The next test is whether the yield can bounce and recover above 5.021%. With gold, silver, and stocks also struggling, that recovery matters to the broader picture.

SMH fell more than 5%, with selling continuing until short covering helped prices recover during the final 10 minutes. Memory demand, artificial intelligence data center construction, and related power demand have made this group a central measure of bullish sentiment. Its current weakness therefore matters to the direction of the broader market.

The chart shows a breakout above a descending trend line followed by a pullback toward that line. Prices are reaching the 50% Fibonacci retracement measured from the March 2026 pivot low, alongside an oversold daily reading. That combination gives us three reasons to watch for a bounce: the trend line retest, the Fibonacci level, and the oversold condition.

Further selling could still come first, with a rebound potentially developing on Monday if selling becomes exhausted in the next session. The recovery objective is a move back inside the parallel channel and toward its midpoint. The depth of this pullback remains concerning, but the setup still points toward a near-term technical bounce.

Meta initially rose after earnings, then reversed and opened around $676 before continuing lower. Support failed during the first 10-minute candle, and repeated attempts to recover were rejected. A rally in the final 10 minutes helped prices, but former support at $658.54 is becoming resistance.

If selling continues, the next support zone combines the pivot high at $612 with the gap fill at $613.48. The W-shaped structure on the chart makes that area an important place to watch for buyers. A bounce from there could return to $658.54, where the recovery would face its next obstacle.

SanDisk posted a significant daily close below the rising parallel channel extending from the beginning of the year. There was a smaller close below it on October 16, but this session showed a clearer failure: prices opened beneath the channel, briefly rallied back inside, then slipped lower. The bearish consolidation that followed points toward additional weakness.

The next support is $1,136, along the rising trend line connecting the February 2 pivot with the July 29 low. That area could produce a bounce back toward the broken channel, setting up a breakdown, retrace, and fade if the recovery fails. Western Digital’s earnings reaction also matters because both companies are connected to artificial intelligence storage demand, even though their businesses are not identical.

Western Digital (WDC) closed near $354 and traded around $350 after hours. The initial earnings reaction lifted prices to $369.47 before that advance faded. It is another example of investors selling into rallies, much like the earnings reversals in Meta and IBM.

A more aggressive support area begins around a move below $320, where previous pivot highs sit. Below that, the gap fill near $312 adds another reference, while previous highs at $307.50 overlap with a descending trend line that has repeatedly produced bounces. The stronger support zone is $307 to $301, where those factors could support a near-term rebound if selling continues.

Gold fell to $4,021 after breaking support at $4,100. The next support is around $3,900, with the possibility of uneven trading between $3,900 and $3,950. Below that, previous pivot highs around $3,885 provide another reference before support at $3,800.

The current bear flag points toward a move into that support area, where selling could begin to stall. I want to see whether prices consolidate there before treating the decline as a buying opportunity. Another bear flag at the next support would leave room for a deeper move toward $3,600 and potentially $3,500.

Silver is approaching its head and shoulders target, with the right shoulder formed in September and the rising neckline already broken. The current selling could carry prices to that target as early as the next session. The area from $53.26 down to $50 is where I would consider a near-term bounce trade and begin adding physical silver.

The preceding move from $36 to $120 happened within only a few months, and that advance is now unwinding. A deeper decline toward the bottom of the parallel channel remains possible, with the April 2011 pivot just below $50 providing an important reference. Below $53, I would begin adding physical silver and continue buying gradually if prices move toward the channel floor around $36.

US oil rose roughly 1.5% before easing to a gain of 1.39%, supported by escalating conflict. More than 20 tankers have been attacked over the past week in the Strait of Hormuz through mines or projectiles, while attacks on Saudi Arabian oil fields and airports add further pressure. Those developments are making it harder for oil prices to come down.

The inverse head and shoulders pattern continues to point toward $116.12 while conflict risk remains elevated. Near term, prices are forming bullish consolidation that could prepare the next move higher. Resistance at $104 is the immediate obstacle.

Natural gas declined after trying to break above its descending trend line. On the 10-minute chart, prices advanced until about 11:00 before giving way, following an inventory release around 10:30 that was broadly in line with seasonal supply building. Forecasts for a milder beginning to November have also contributed to recent selling.

My thesis is that supplies diminish as winter progresses, allowing prices to turn higher and clear descending resistance at $3.20. From there, I expect another test of the rising trend line at $3.65, which marks the bottom of a parallel channel. The immediate question is whether prices move lower toward trend line support first or begin closing above resistance.

Procter & Gamble (PG) gapped higher after earnings, breaking above a descending parallel channel extending from March 2025. Several days of consolidation formed a small bull flag before the breakout. The rally then reached a cluster of previous highs, where profit-taking pulled prices slightly below the session’s peak.

The daily RSI is 74.46, above the 70 threshold for an overbought reading, so I would be careful about chasing the move. The next confirmation is a daily close above the latest session’s high, which would strengthen the breakout. If that happens, a pullback toward the broken trend line could offer a buying opportunity.

The upside area is $180 to $190, reflecting the other parallel channel on the chart and the March 2025 pivot high around $180. That destination depends on prices remaining above the descending channel they have just cleared. Conagra also had a strong day, reinforcing the strength in defensive stocks.

GEV fell more than 10% at one point, losing more than $110 during the session. It reached $813 before closing at $827, with selling pressure persisting through most of the day. Earnings are coming on October 28, and some investors may be taking profits early after watching other stocks suffer sharp earnings reversals.

The chart shows a breakdown from a parallel channel, a retrace toward the channel, and another rejection. Prices also moved above a separate descending trend line without confirming the move through sustained follow-through. That failed recovery led to consolidation and another sharp decline.

The next support is the 61.8% Fibonacci retracement at $784.49, aligned with the March 2009 pivot lows and the February pivot high. With RSI at the oversold end of its channel, a move into or briefly through that level is likely to produce a technical bounce. That rebound could reach the 50% retracement at $863.

BE moved lower after earnings toward the bottom of its parallel channel at $201.79, just above $200. After hours, prices reached $201.50 and rallied to $215, with an $8 pop within that recovery before drifting lower again. Buyers have responded near the channel boundary, but the next opening remains important.

If BE gaps beneath the channel, I expect a move toward $188.37. That is the 78.6% Fibonacci retracement measured from the July pivot low to the September pivot high. It could produce a brief rebound, potentially within the session, but a breach could lead to several more days of selling.

Digital Assets and Crypto

Bitcoin is still holding support, but the bear flag from the recent highs remains a concern. Prices have struggled to move from the lower half of the formation into its upper half, leaving little evidence of stronger bullish consolidation. Repeated visits to support increase the chance that buyers eventually give way.

The immediate level is $80,500, with the next support at $75,000 if that threshold breaks. For now, the structure remains intact because support has held. The problem is that each weak rebound leaves Bitcoin returning to the same vulnerable area.

Why It Matters

The main issue is that lower yields are failing to lift stocks or precious metals, suggesting there may be pressures beneath the surface. Meanwhile, Procter & Gamble’s earnings breakout and Conagra’s strength show buyers favoring defensive shares. Oil is responding to a different force, with conflict and supply threats supporting its bullish pattern.

In technology, several stocks are reaching areas where technical buyers could respond even as the broader selling remains heavy. An oversold reading means the decline has become stretched, while a Fibonacci retracement marks a measured portion of an earlier advance. Those conditions can support a rebound, but a temporary bounce does not by itself repair a broken channel.

Key Details

Market Outlook: Opportunities and Risks

The clearest rebound opportunity is in SMH, where the trend line retest, 50% retracement, and oversold reading overlap. GEV, Western Digital, Meta, and SanDisk also have identified support areas that could attract buyers, although their setups remain tied to temporary recoveries within damaged structures. Procter & Gamble offers a different opportunity: a confirmed earnings breakout followed by a pullback toward the broken trend line.

Precious metals need patience as gold works toward lower support and silver approaches its head and shoulders target. Oil continues to point higher while its inverse head and shoulders holds, and natural gas has a recovery thesis tied to winter demand reducing supplies. Bitcoin remains vulnerable because its bear flag has not improved and repeated tests of $80,500 keep the risk of $75,000 in view.

What to Watch Next

In the next session, I am watching the S&P 500 fund at $760.40, the Nasdaq’s channel boundary, and whether the 10-year yield recovers above 5.021%. SMH may need another round of selling before its bounce develops, potentially on Monday. Procter & Gamble needs a daily close above the latest high, while Western Digital’s opening reaction could influence SanDisk.

BE’s opening relative to its channel will determine whether $188.37 comes into play. GEV’s October 28 earnings remain the next stated company catalyst, with $784.49 the nearby support to monitor first. Silver could reach its target in the next session, while oil’s $104 resistance, natural gas at $3.20, and Bitcoin at $80,500 remain the key technical tests.

Bottom Line

Technology is approaching potential bounce areas, but falling yields have yet to provide the relief we would normally expect. Defensive strength and conflict-driven oil gains show why the market cannot be treated as one uniform trade. Stay patient at support, and let the next price response confirm whether a recovery has buyers behind it.