Stock Market Rotation Ahead of Midterms: QQQ, Semiconductors and Bitcoin Test Key Support

The headline coming out of Monday's market was technology weakness. The more important story was what held up while technology sold off.

On the November 2 edition of Trading the Close, Verified Investing Pro Trader Drew Dosek examined a market showing clear differences beneath the major indexes. The Nasdaq 100 ETF (QQQ) and semiconductor stocks were losing technical support, yet small caps and select defensive names were holding up considerably better. That divergence matters heading into Tuesday's midterm elections, when political uncertainty, earnings and important technical levels could combine to produce another volatile session.

The question isn't simply whether stocks can bounce after the election. It's whether the weakness in technology begins spreading across the broader market or whether investors continue rotating into areas showing relative strength. Drew's charts provided a framework for evaluating both possibilities without having to predict the election outcome.

S&P 500 and QQQ Technical Analysis: Market Weakness Is Not Broad-Based

Monday's session exposed an important split between the major indexes. The S&P 500 gapped lower and broke beneath two near-term trend lines, weakening its immediate technical structure. However, the index remains near the upper portion of a longer-term rising parallel channel dating back to October 2022. That broader structure gives traders an additional reference point if selling continues.

The QQQ chart showed more immediate damage. After closing below near-term support, the ETF faces a potential move toward the lower boundary of its parallel channel. Drew identified $661.14, a July pivot low, as an important downside reference. A reaction at that level would be worth watching, but buyers would still need to demonstrate that they can defend support before a more meaningful recovery becomes credible.

What makes this decline different from a uniform market sell-off is the behavior of small caps. The Russell 2000 ETF (IWM) declined just 0.07% in the session described, compared with a 1.36% drop in QQQ and a 2.71% decline in semiconductors. That relative performance suggests the selling was concentrated rather than evenly distributed.

Drew also highlighted strength in names such as Procter & Gamble and Visa. Their resilience, alongside IWM's relative performance, supports the possibility that some capital is shifting away from technology rather than leaving equities altogether. Price action alone cannot establish the exact flow of institutional money, but the divergence is meaningful.

For IWM, the next upside reference is the gap fill near $284.15. A move toward that level would help assess whether the relative strength can develop into a broader recovery. Conversely, if small caps begin losing support alongside technology, the case for rotation would weaken.

The midterm elections add another variable. Markets may respond to greater policy clarity once results become available, but the direction of that response is not predetermined. For traders, the more useful information will come from how the indexes behave around their established support and resistance levels after the results.

Semiconductor Stocks Near Support: SMH, AMD and SMCI Levels to Watch

Semiconductors were among the weakest areas of Monday's market, and that weakness carries additional importance because of the sector's role in the technology rally.

Drew's SMH chart highlighted a potential support area near the July pivot at $503.63, with a declining trend line projected around $500.30 for Tuesday's session. The proximity of those two levels creates a technical zone worth monitoring, particularly after the sector's sharp decline.

A brief move below $500 followed by a recovery could indicate that sellers are becoming exhausted. However, simply reaching support is not confirmation of a bottom. Traders would want to see buyers respond, price stabilize and the ETF begin reclaiming broken levels before assigning greater weight to a recovery.

If that reaction develops, the lower boundary of the former parallel-channel structure near $538 becomes a possible upside reference. That would represent a meaningful countertrend move, but it would not automatically repair the broader technical damage.

The same distinction applies to individual semiconductor stocks.

Super Micro Computer (SMCI) has broken lower from a bearish consolidation pattern, leaving Drew focused on a potential support area beginning around $29.12. Below that sits the 78.6% Fibonacci retracement near $28.17, calculated from the July low to the October high.

The $28.17 level is particularly relevant because it provides a defined technical reference after an extended decline. It does not guarantee a bounce, and a sustained break below it would weaken the support thesis. For traders considering a reversal setup, the response to the level matters more than the level itself.

AMD presents a similar problem. Its rapid decline has carried price through multiple rising trend lines, while the RSI reading cited in Drew's analysis fell to 34.61. That shows weakening momentum, but an RSI approaching oversold territory does not establish that selling has ended.

Drew identified the 50% Fibonacci retracement near $425.69, alongside gap-related levels around $430 and $456, as areas to monitor if weakness continues. Earnings-related volatility could accelerate a move into those zones, although the reaction will depend on the report and subsequent trading.

The broader lesson is straightforward. A sharp decline can create the conditions for a technical bounce, but the speed of the sell-off is also a reason to be patient. The strongest setups develop when important support is tested and price begins confirming that buyers are willing to defend it.

Oil Prices and Treasury Yields: Two Macro Charts That Could Influence Stocks

Technology was not the only market facing an important technical decision. Drew also examined oil and the 10-year Treasury yield, two markets that can influence inflation expectations, financial conditions and equity valuations.

In oil, attention centered on a potential inverse head-and-shoulders pattern. A confirmed breakout from that structure could have opened the door to a much larger upside move, with a projected measured-move objective near $148 per barrel.

That bullish scenario did not receive the confirmation it needed. Oil tested a declining resistance trend line but failed to sustain the breakout, leaving the larger upside projection unconfirmed. Drew identified support near $93.73, an area associated with previous September consolidation.

The distinction is important. A failed breakout reduces the immediate strength of the bullish technical case, but it does not establish that oil prices must continue falling. Traders still need to monitor whether nearby support holds or whether sellers gain control of the next leg.

The 10-year Treasury yield was also approaching a technical decision area. Drew highlighted the midpoint of a longer-term parallel channel dating back to April 2023. If yields continue declining through that region, the previous pivot near 4.809% becomes a downside reference.

Lower oil prices and declining yields could ease some of the pressure on equities, particularly if investors interpret the moves as relief from inflation and interest-rate concerns. That relationship is not automatic. Falling yields can also reflect concerns about economic growth, making the broader market reaction essential to interpreting the signal.

For now, the important observation is that neither chart has confirmed a new major upside breakout. That leaves room for the equity market to stabilize, provided the technical deterioration in technology does not spread.

Gold and Silver Technical Analysis: Support Holds as Stocks Diverge

Precious metals offered another example of why traders need to evaluate individual charts rather than apply one interpretation to every asset.

Gold recovered after briefly moving below the psychological $4,000 level. Drew identified a broader support area extending toward $3,950, where previous price pivots help define the zone. The recovery suggests buyers were willing to respond to that area, although additional follow-through is needed to establish a sustained move higher.

The next resistance reference sits near $4,104.14. A successful move through that level would strengthen the near-term recovery, while another rejection could leave gold trading within its existing range.

Silver also responded to an important historical reference. After retreating sharply from its previous highs, the metal tested the area around $49.83, corresponding to the April 2011 high cited in Drew's chart analysis.

Monday's rebound suggests that historical level remains relevant to market participants. Drew identified the $60 to $61 region, near the midpoint of a larger parallel channel, as a potential upside reference if the recovery develops. On the downside, the lower channel boundary around $36.50 remains a broader structural level.

Neither metal has to move directly toward those objectives. Gold and silver can spend extended periods consolidating after significant price swings. The more useful approach is to identify where buyers have responded, where resistance is likely to emerge and what price behavior would challenge the current interpretation.

Bitcoin Price Analysis: Broken Support Shifts Focus to $75,000 and $69,841

Bitcoin's decline provided a separate example of the relationship between technical weakness and unexpected news.

Drew's main observation was that Bitcoin had repeatedly tested an important horizontal support level before finally breaking beneath it. Repeated tests can weaken support when buyers are unable to produce a sustained recovery, particularly when each rebound loses momentum.

That technical deterioration does not mean the chart predicted a particular news event. It means Bitcoin was already showing vulnerability, leaving the market more exposed to an additional catalyst.

Following the breakdown, Drew identified the $74,911 region, near the psychological $75,000 level, as an important downside area. Traders should watch whether Bitcoin stabilizes around that zone or continues making lower lows.

Below that, the longer-term rising parallel channel provides another structural reference near $69,841. A successful defense of that boundary would leave the broader rising-channel interpretation intact. A sustained breakdown would require reassessing the longer-term bullish structure.

The key lesson is not that technical analysis can anticipate every headline. It is that identifying deteriorating support in advance gives traders a framework for managing risk when an unexpected event accelerates the move.

Visa, Apple and Palantir: Individual Stock Setups Amid Market Volatility

Although technology weakness dominated the session, several individual stocks continued to offer useful technical reference points.

Visa showed relative strength through a breakout, retracement and subsequent recovery. Drew's longer-term chart also highlighted a potential cup-and-handle formation, with a measured-move projection near $456.87.

That projection is a technical objective rather than an assured destination. Visa is also trading near the upper portion of a rising parallel channel, where the possibility of consolidation or a pullback becomes relevant. A sustained move higher would strengthen the bullish interpretation, while a return beneath the breakout area would raise questions about its durability.

Apple offered a different setup. During regular trading, the stock reached approximately $331.98, testing a rising trend line for the third time. The repeated interaction makes the trend line an important area to monitor, but a third test is not inherently more reliable than earlier tests.

If buyers continue defending that support, Drew identified the gap fill near $344 as a potential upside objective. A sustained break below the trend line would instead weaken the near-term bullish setup.

Palantir's earnings-related volatility brought Fibonacci levels into focus. Drew highlighted the 38.2% retracement near $172.23, followed by a more significant potential support area around $159.65. The latter combines the 50% retracement with a rising trend line extending from the June lows.

That overlap makes $159.65 a technically relevant area, although earnings reactions can move quickly through expected support. Waiting for stabilization and defining the point where a setup is no longer valid remain essential parts of the process.

These individual charts reinforce the larger market picture. Even when an index is weak, some stocks can show relative strength or approach meaningful support. The opportunity is in recognizing those differences without assuming every technical level will produce a successful reversal.

Stock Market Outlook for November 3: What Traders Should Watch After the Election

Tuesday's midterm elections arrive with several important markets already testing technical boundaries. That makes the next session less about predicting a political outcome and more about evaluating how price responds once additional information becomes available.

For the major indexes, the priority is whether QQQ can regain lost support while IWM maintains its relative strength. If small caps continue outperforming and technology begins stabilizing, the rotation thesis becomes more constructive. If weakness broadens, the market may be entering a more significant corrective phase.

In semiconductors, the SMH support region around $500 to $504 is a particularly important area to monitor. A brief breakdown followed by a recovery would offer a different message than sustained trading below the zone. AMD and SMCI also have defined downside levels, but both require evidence of buyer participation before a reversal case becomes more convincing.

Outside equities, oil's failed breakout and the direction of Treasury yields could influence the next market move. Bitcoin's reaction near $75,000 and the longer-term channel boundary below it will help determine whether its decline is stabilizing or developing into a deeper correction.

The common thread across these charts is confirmation. Technical support identifies where a reaction might occur. The behavior of buyers and sellers around that support determines whether the setup is worth pursuing.

Bottom Line: Rotation Matters More Than the Headline Sell-Off

Monday's technology decline was significant, but it did not tell the whole market story. Small caps held up better, select defensive names showed strength and several important assets approached established technical levels.

For Drew Dosek, the charts provide a way to separate those signals from the uncertainty surrounding elections, earnings and economic data. The objective is not to anticipate every headline or predict the exact market low. It is to identify where the current structure is vulnerable, where a reaction may develop and what would confirm or invalidate the trade idea.

Heading into November 3, the most important question remains whether the selling stays concentrated in technology or spreads across the broader market. That answer will carry more weight than any single political headline.

This article summarizes technical market analysis discussed on Verified Investing's Trading the Close. All levels are educational references, not guaranteed outcomes or personalized investment recommendations. Trading and investing involve risk, including the possible loss of principal.