The Worst Selloff of the Year: Earnings and Election Destruction in Action

Thursday, November 5, 2026

Hi Traders!

It was a brutal day in the markets, with yesterday’s post-midterm rally not just fading but getting completely creamed. Downside price action like this always needs to be viewed from a technical standpoint, using a combination of volume, key support breaks, comparisons to previous downtrends, and sentiment readings such as the put/call ratio. Today, most readings are flashing red.

Take a look at the chart of the Nasdaq futures below:

Unfortunately, the Nasdaq has broken most critical support zones, from the multiple Fibonacci symmetry zones to the 200 SMA to the lows from July. This high-volume selling is substantial, and in this type of situation, the selling will most likely continue until a short squeeze occurs.

AMD Earnings Follow-Through

On Tuesday, I was looking for AMD to sustain its earnings bounce and help stabilize the semiconductor sector. While price action looked promising yesterday, post-midterms AI-revolution stocks have been completely hammered as the market digests the Blue Wave. In theory, the Blue Wave will slow the AI buildout, and semiconductors and memory stocks took the brunt of the significant selling.

Today, AMD finished today at $404.40, down 17.26%. SMH fell 11.21%, and the Nasdaq Composite lost 5.52%. That is substantial technical damage across a group that has now broken substantial downside support. Taking a look at the Nasdaq futures, with the 200 SMA broken, multiple symmetry support zones breached, and high-volume selling going out on the day’s lows, I believe we are in for more downside until we hit true capitulation.

The AI Revolution

While earnings and forward projections are important, today, it was the election results that were driving price action. The initial selling leads to more selling, and ultimately, capitulation selling and margin calls. With the massive increase in prices we have seen in AI Revolution names, many bought at too high a price, and the squeeze they feel leads to forced selling. This is what it looks like when support lines break and selling intensifies the deeper the market falls.

That doesn’t mean I’m changing my views about the possibilities behind the AI buildout due to the election, but it does mean I need to shift directions and go with the high-volume flow because, as a trend follower, that is what I do. I alone cannot fight this wave of selling. I can remain constructive on the long-term AI opportunity while respecting a bearish short-term chart. Those are different time frames, and this is a market where that distinction matters.

AMD’s Earnings Were Strong. The Follow-Through Wasn’t.

AMD’s November 3 earnings release reported $13.4 billion in revenue and adjusted earnings of $2.09 per share. Data center revenue reached $8.5 billion, up 97% from a year earlier, and the company guided fourth-quarter revenue to approximately $17 billion, plus or minus 3%. Those numbers support why I have been interested in the business.

But in Tuesday’s newsletter, I also said AMD needed to hold above $500 after the market opened, and if it fell, at least above $450. Wednesday’s high reached $514.61, but the stock finished at $488.78. Buyers did not hold that key level.

Today, AMD opened at $452.50 and closed at $404.40, near its $402.10 session low. The opening gap attracted more selling, and that selling was at almost 4x the usual volume on AMD. That is a significant and substantial move; it is not the time or place to try and catch a falling knife. Buying at support is all about tickers falling within expected ranges, identifying pullback buys at zones that hold, and looking for a shift higher once price gets to those support zones.

This move is not that.

The immediate question is whether AMD can reclaim the area around its 200-day SMA, now approximately $415, and hold it. At this juncture, this chart, along with many others, has broken the 200 SMA on the daily chart. This is a key and pivotal level that usually leads to even more downside. If we see a bounce here, a bounce into either area needs follow-through; touching a level alone does not repair the trend.

The Semiconductor Weakness Goes Beyond AMD

Today’s selling reached AI accelerators, memory, chip design, and mobile chips. Micron fell 17.46%, Arm fell 13.08%, Qualcomm fell 9.49%, and Nvidia fell 9.26%. AMD was part of a much broader semiconductor decline.

Arm and Qualcomm both reported yesterday, November 4. Their reactions add to the information coming from this earnings season, but I am watching the whole group. One stock’s bounce will carry more weight if its peers begin to stabilize as well, but ultimately this season has been all about earnings destruction.

Use my free Five Star Market Map to see which companies sit inside the sector and industry ETFs. Connecting the individual names to their groups helps explain why weakness in several major chip stocks matters beyond a single earnings report.

What I’m Watching Next

After a decline this sharp, it is all about how the market gaps tomorrow. I don’t like making guesses about overnight gaps, though I’m leaning towards a gap down that gets sold even more tomorrow.

I prefer to focus on market gaps and what I can do upon market open. Given the put/call ratio is above 1.0, we could see a short-covering rally if and when we get a gap-up at the open. But it would have to be a large gap, and it would have to truly entice short sellers to cover. If not, that move will only be sold as people take the opportunity to exit at a slightly better price.

Historically, all year, the semis have rallied strongly after they fell, but this kind of break doesn’t strike me as the same price action. This was a head-and-shoulders pattern on SMH, followed by a break of a ledge of support, the break of the 200 SMA, and 4-5x the average volume of selling, removing all gains since the beginning of April 2026. An 11% down day in SMH makes this the worst day of the year for semiconductors and breaks all the technical support zones I had. In this situation, capitulation, COVID-like crashes, and limit down days are more likely, because selling begets more selling. The earnings numbers don’t matter anywhere near as much as 4-5x regular volume selling across stocks and indexes.

I am still interested in the long-term growth themes, but these charts will need significant repair before I’m jumping in to buy.

This means shifting gears short-term, and instead of trying to buy a falling knife, it’s identifying spots to go along with the trend. For short-term trades, shifting to trade AI-revolution stocks in a downtrend doesn’t mean you hate the revolution; it just means following the trend that’s in front of you. So far, I haven’t adjusted my long-term holdings. Being bullish on a company’s future doesn’t require buying every dip, especially if it looks like it’ll keep falling. That may change in the near future, but I’m not seeing a buy yet. I’ll be monitoring closely, especially for if and when the short-covering rally comes through. Ideally, it will be strong enough to correct some of this destruction…but I’m not holding my breath.

Trade smart, stay disciplined,

VP of Options, Simpler Trading
@traderDanielle

Market data: November 5, 2026 regular-session closes. Price changes and daily SMAs calculated from Yahoo Finance historical data for AMD, SMH, QQQ and the other symbols shown. The Nasdaq Composite close is also corroborated by AP’s closing market summary. The historical Earnings Hot Zone screenshot is dated separately.

For educational purposes only, not investment advice. Trading involves substantial risk of loss. This post includes affiliate links, and I may earn a commission if you purchase through them. Read the full disclosure.