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Thursday, November 5, 2026 · after the close
Chip stocks had their worst day since 2020 after voters turned against AI data centers. We fell more than the S&P because about 45% of the account rides the AI trade.
Own it
- Wednesday's evening review crashed and Thursday's morning run died before it re-ran itself. Both now restart automatically.
- The owner saw the drop before I flagged it. Since Thursday night an alert goes out whenever the account moves 2% or more during market hours.
Today
−5.5%
S&P 500 −4.4%
Since Sep 24
−7.3%
S&P 500 −4.5%
Vs the S&P
−2.9 pts
since Sep 24
Cash
20.2%
of the account
The account vs the market
Account
What moved the market
The trigger: voters turned against data centers
Democrats won both the House and the Senate on Tuesday. Most of the 41 to 45 local ballot measures restricting data centers passed, after rising power and water bills made them an election issue. Texas elected Gina Hinojosa, who wants an immediate moratorium on new data centers; Texas holds about 27% of planned US data-center capacity (Wells Fargo). UBS puts about 30% of planned 2028 US capacity at risk.
How it played out on Thursday
S&P 500 (worst day since April 2025)−4.4%
Nasdaq−5.5%
Chip index (worst day since March 2020)−12.3%
NVDA−9%
Micron, AMD−17%
SanDisk−22%
Japan's Nikkei, Friday−6%
Why it hit so hard
- Tech was already falling: the Nasdaq-100 lost 6.6% in October, its worst month in a year and a half.
- The big AI spenders are stretched. Several now spend more cash than they bring in and borrow to fund data centers.
- Their latest earnings disappointed, with signs that AI spending is slowing.
- Rates are high: the 10-year Treasury yields about 4.95%, and markets price about a 73% chance of a Fed hike in December.
- The trade was crowded and partly bought with borrowed money, so falling prices forced more selling.
Where it stands
Friday morning Nasdaq futures were up about 1.1% and the S&P was flat. Jefferies called Thursday reactionary, not a fundamental reset. The question for us is whether AI spending gets cut or just moves abroad, where NVDA and TSM still sell the chips. TSM's October sales (around Nov 10) and NVDA's earnings (Nov 17) will tell us.
The market by sector
S&P 500: day −4.4% · week −4.7% · month −5.7% · 3 mo −5.0%
CommunicationXLC
Ad spending (Google, Meta); their AI capex
−0.6%
UtilitiesXLU
Rates; now also AI power demand
−0.7%
Consumer staplesXLP
Defensive: people buy food in recessions
−0.8%
Real estateXLRE
Rates; data-center landlords
−1.8%
Health careXLV
Defensive; drug-price politics
−2.5%
Developed ex-USEFA
The dollar; Europe and Japan growth
−2.9%
FinancialsXLF
Yield curve, loan losses, deal activity
−2.9%
MaterialsXLB
China demand, the dollar, metal prices
−2.9%
EnergyXLE
Oil and gas prices
−3.0%
Consumer discretionaryXLY
Jobs, wages, rates; Amazon and Tesla
−3.8%
IndustrialsXLI
Factory and data-center construction; defense
−4.1%
SoftwareIGV
Company IT budgets; AI as threat and tool
−4.4%
Small companiesIWM
Rates and credit: they borrow at floating rates
−4.6%
Emerging marketsEEM
The dollar, China, commodities
−5.8%
TechnologyXLK
AI spending; rates (profits far in the future)
−8.0%
SemiconductorsSMH
AI data-center build-out; China export rules
−11.2%
16 sector and region funds, total return as of the Nov 5 close. Strongest first.
How the pieces connect
- This was a rotation out of AI more than a crash. Over the past month chips fell 28% and tech 19%, while staples (+12%), health care (+10%), real estate (+9%) and financials (+7%) rose. The average S&P stock beat the index by 9 points: the damage sits in the giants.
- Money ran to safety. The 10-year yield fell about 44bp in a month to 4.84% as bond prices rose, which helps rate-sensitive real estate and utilities.
- Credit is the one to watch. Junk bonds trailed Treasuries by 3% in a month. AI companies borrow heavily to build data centers, so lenders get nervous when the AI story cracks. If that spreads, everything falls, not just chips.
- Emerging markets fell 14% in a month because Taiwan and Korea are chip countries (TSM, Samsung, SK Hynix). Our IEMG sits in the same trade.
| Link | 1 month | Trend | |
|---|---|---|---|
| Chips vs the S&P Is the AI trade leading or cracking? | −24.0% | falling | |
| Average stock vs the S&P Broad rally, or a few giants carrying it? | +9.2% | rising | |
| Cyclicals vs defensives What investors expect from the economy | −5.4% | falling | |
| Junk bonds vs Treasuries Credit stress usually shows here first | −3.0% | falling | |
| Small vs large companies Sensitivity to rates and credit | +3.5% | rising | |
| Copper vs gold Growth vs fear; tends to track yields | −4.6% | falling |
Rates, dollar, commodities, fear
10-year Treasury yield
4.84%
day -6bpmonth -44bp
Dollar index
101.55
day 0.0%month −0.7%
Oil (WTI)
$90.52
day +2.7%month +2.5%
Gold
$4,114
day +1.0%month −0.7%
Copper
$6.25
day −2.4%month −5.3%
VIX (fear gauge)
28.18
day +69.7%month +86.9%
Bitcoin
$75,747
day −0.3%month −7.1%
Early warning: 5 of 8 red
Chips cracking vs the S&P-22.7 pts; -21.1% vs 50-day1-month gap below -5 pts AND chips under their 50-day average
Market narrowing+4.1%Average stock trails the S&P by 3%+ over 3 months
Credit stress-3.0%Junk bonds trail Treasuries by 2%+ over a month
Fear28.2VIX above 25 (watch above 20)
Rates squeeze+18bp10-year yield up 40bp+ in 3 months
Dollar surge+2.0%Dollar up 5%+ in 3 months
Defensives taking over-5.4%Cyclicals trail defensives by 4%+ over a month
Nasdaq trend-10.4% vs 50-day; -4.8% vs 200-dayNasdaq-100 under its 200-day average (watch: under 50-day)
Information, not trade rules. Backtested 2000 to 2026: stepping aside when the chip light turns red lost 3.4 to 6.0 points a year after tax vs holding; half its alarms were false.
What the map says we can do
- The lights were red a week early: 3 of 8 at the Oct 30 close and again Nov 4. I called it a blip on Wednesday. But acting on them does not pay: lab round bt-028 found that stepping aside whenever the chip light turned red lost 3.4 to 6.0 points a year after tax over 2000-2026. Half the alarms were false, and every exit triggered short-term tax.
- About 45% of our book is in the vertical that cracked (the Nasdaq-100 fund, the momentum fund, NVDA, TSM, and the chip-heavy part of emerging markets). The verticals that rose reach us only through the S&P funds.
- The momentum fund (MTUM) re-picks its stocks at MSCI's November review: announced Nov 11, effective Dec 1. It ranks on 6- and 12-month momentum (it already dropped NVDA in May), so part of the rotation away from chips happens inside the fund, with no taxable trade for us.
- Buying after forced selling has paid: after 26 past -4% days the S&P was higher 3 months later 92% of the time. Friday's ONEQ buy puts the last 20% of the account, held in cash since Thursday's tax-loss sale, back in at those prices.
The account at the close
| Holding | Weight | Day |
|---|---|---|
| SCHX US large caps | 19.1% | −4.3% |
| MTUM US momentum | 18.9% | −8.2% |
| VOO S&P 500 | 17.5% | −4.4% |
| RSP S&P 500 equal weight | 6.8% | −2.9% |
| IEMG Emerging markets | 6.7% | −5.6% |
| IEFA Developed markets ex-US | 5.2% | −3.0% |
| NVDA Nvidia | 3.1% | −9.3% |
| TSM TSMC | 2.2% | −10.8% |
| Cash Settling or waiting to be invested | 20.2% |
Rules and how close they are
| Rule | Fires at | Now | |
|---|---|---|---|
| NVDA sell line | $155.48 | $181.59, 14% above | watch |
| Re-check any holding at -25% from cost | -25% | NVDA, TSM, MTUM are 8 to 16% above it | watch |
| Junk-bond spreads (credit stress) | 4.00 | 3.40 on Nov 3; Thursday's not published yet | watch |
| Nasdaq-100 trailing the S&P over 6 months | 15 points | about 6 points (Thursday morning) | clear |
| Dollar up over 6 months | +5% | +0.9% | clear |
| Momentum fund above 25% of the account | 25% | 19.2% | clear |
Research
AppLovin (APP), after its earnings
WATCHExpected return +6.8% a yearBad case -54%
A strong quarter: sales up 55% and next quarter guided up 43%, with none of our warning signs tripped. But the stock jumped 31% to $356, which cuts the expected return below our 12% bar, and its own history says a bad case is worse than our -40% limit. It starts to qualify below about $274. No trade.
Next
- 08:45: buy ONEQ (a near-identical Nasdaq fund) with the cash (20% of the account) from Thursday's QQQM tax-loss sale, about 5% below where we sold.
- Daily tax-loss check, then the watchdog every 20 minutes, with a Telegram alert at a 2% or 4% move.
- 15:30: evening review and research. HALO and EOG reported on Thursday, so they get re-checked first.
Sources: Robinhood (account, closes), Yahoo Finance (S&P history), Reuters, Fortune, Fox Business, Al Jazeera, The Guardian, NPR, CNBC.