Stock Market Selloff: Nasdaq and Semiconductors Approach Critical Oversold Levels

The November 5 selloff left technology stocks and the broader market facing a difficult technical setup. Major indexes broke important support levels, semiconductor stocks extended their declines, and several widely followed technology names moved into deeply oversold territory. Yet Treasury yields were falling at the same time, creating a divergence that deserves attention.

For traders, the question heading into Friday is whether these oversold conditions can produce a meaningful rebound or whether the market needs to find support at lower levels first.

During Thursday's Trading the Close, Verified Investing Pro Trader Drew Dosek examined the damage across the major indexes, identified the next technical levels to watch, and explained why a sharp decline can create opportunities without necessarily signaling that the bottom is in.

His approach centered on a straightforward principle: when momentum becomes stretched and price approaches established technical support, the probability of a reaction can improve. The challenge is recognizing the difference between a potential bounce and a confirmed change in trend.

Why Technology Stocks Fell as Treasury Yields Declined

One of Thursday's more important developments was the relationship between Treasury yields and technology stocks.

The 10-year Treasury yield declined toward 4.835%, reaching a technical support area associated with the January 2025 highs. Drew discussed the potential implications of the midterm election results, including the possibility that greater political gridlock could affect expectations for government borrowing and fiscal policy.

Lower Treasury yields generally provide support for growth-stock valuations because they reduce the discount rate applied to future earnings. That relationship made Thursday's technology selloff particularly notable. Even as yields moved lower, investors continued reducing exposure to the sector.

Concerns about potential restrictions affecting artificial intelligence infrastructure and data center development added another source of uncertainty. The extent of any future regulatory changes remains unclear, but the possibility of slower investment or additional oversight appeared to weigh on sentiment.

The divergence suggests that lower yields alone were insufficient to stabilize technology stocks. Sector-specific concerns and deteriorating technical structures remained important factors in the market's response.

For Drew, the next step was to identify where selling pressure might begin to meet meaningful support. With several technology charts approaching oversold readings, the potential for a rebound was increasing, although confirmation remained necessary.

S&P 500 and Nasdaq 100: Key Support Levels After the Breakdown

The broader market's technical deterioration was evident in both the S&P 500 and Nasdaq 100.

The SPDR S&P 500 ETF (SPY) broke below the consolidation structure that had developed following its August 4 breakout. Previous attempts to move beneath support had been followed by recoveries, but Thursday's decline placed the index-tracking ETF closer to its next major technical levels.

Drew identified an immediate support area between $729.10 and $729.46, combining a previous low pivot with an unfilled gap. If that zone fails to hold, the next important level sits near $723.43, corresponding to a Fibonacci retracement.

The daily RSI on SPY had declined to approximately 33.5, approaching oversold territory. That reading indicates weakening momentum and a potentially stretched decline, particularly as price approaches multiple technical support levels.

The Nasdaq 100, tracked by the Invesco QQQ Trust (QQQ), displayed even greater technical weakness.

QQQ's daily RSI reached approximately 26.86, placing it firmly in oversold territory. Price also moved below a long-term rising trendline extending from the April 2025 lows, weakening a structure that had supported the broader advance.

The next significant downside level sits near $636.60, corresponding to a previous January 28 high pivot. Should selling continue, that area becomes an important location to evaluate the market's response.

On a rebound, Drew identified resistance near $656.09, associated with the middle pivot of a developing M-pattern. That level could become an obstacle for buyers attempting to regain control.

The distinction is important. An oversold market can rebound sharply without repairing the underlying technical damage. For a recovery to become more convincing, traders would want to see price reclaim broken support and begin establishing a more constructive pattern of higher lows.

As Drew explained during the broadcast, aligning oversold momentum with established support can improve the probability of a bounce. Neither condition guarantees that buyers will immediately regain control.

Semiconductor Stocks: SMH RSI Signals Extreme Selling

The semiconductor sector provided one of Thursday's clearest examples of how quickly market structure can deteriorate.

The VanEck Semiconductor ETF (SMH) moved through important moving averages on the weekly chart, including the 20-period and 50-period averages. The decline reflects a significant change in momentum for a sector that has played a major role in the broader technology advance.

SMH's RSI reached approximately 26.03, placing the sector in deeply oversold territory.

Drew identified $427.94 as an important downside pivot to monitor. If price reaches that level and buyers begin defending it, the setup could support a technical rebound.

The more substantial resistance area sits near $484.15, where previously broken trendlines converge. That zone provides a potential reference point for measuring the strength of any recovery.

A rebound toward resistance would represent a meaningful move, but the sector would still need to demonstrate that buyers can reclaim lost technical ground.

The broader lesson is that oversold conditions become more useful when combined with identifiable chart levels. RSI alone provides information about momentum. Support and resistance help traders evaluate where price may react and whether the reaction is developing into something more substantial.

SanDisk, Nebius and Western Digital: Oversold Technology Stocks to Watch

The semiconductor and technology-related selloff also produced several individual charts with notable technical setups.

SanDisk (SNDK) experienced a substantial decline, with the original market review citing losses of approximately 40% since October 28 and 57% since September 22. Its daily RSI had fallen to approximately 24.15, indicating particularly stretched downside momentum.

After breaking below the middle pivot of an M-pattern, the stock approached another potential support area. Drew identified $777.60 and an unfilled gap near $780.90 as levels worth watching for a possible reaction.

If buyers stabilize the chart, resistance near $998.19 becomes a longer-range reference point. Given the extent of the decline, however, traders would need evidence of stabilization before assuming that the support zone will produce a sustained recovery.

Nebius Group (NBIS) also broke beneath the lower boundary of its rising parallel channel. The stock reached an intraday low near $113.30 before attempting to recover, with a 78.6% Fibonacci retracement at approximately $121.73 serving as a technical reference.

Its RSI near 29.71 suggested that downside momentum had become stretched. A recovery could eventually bring the $145.61 M-pattern pivot back into focus, although reclaiming broken support would be an important first step.

Western Digital (WDC) presented a similar picture. Price broke below a rising trendline with multiple prior touches, as well as a secondary trendline extending from June. Drew highlighted a 78.6% Fibonacci retracement near $259.61, while the RSI reached approximately 28.76.

A technical rebound could bring the previously broken trendline near $304 into view. That remains a potential resistance objective rather than a confirmed destination.

Across these charts, the common factor is the combination of substantial declines, oversold momentum and approaching technical support.

Drew's framework favors preparation at these levels rather than chasing a falling stock. The quality of the price reaction matters, particularly when the broader market remains under pressure.

Gold, Silver and Oil: What the Commodity Markets Are Signaling

While technology stocks struggled, the commodity markets offered a different perspective on risk appetite.

Gold gained approximately 0.72%, reaching $4,146 as investors continued showing interest in the precious metal. Its technical structure remained constructive, with previous resistance near $4,104 serving as an important support reference.

As long as that area holds, Drew identified $4,271 as the next potential upside level, followed by a longer-term channel objective near $4,500.

Silver did not demonstrate the same strength. After initially advancing, it surrendered those gains and remained within its broader trading range.

Silver's industrial exposure may have contributed to its relative weakness, although the session's price action alone does not establish a direct connection to technology-sector selling.

For now, Drew is watching whether silver can establish a constructive consolidation pattern before attempting another move toward resistance near $55.38.

Crude oil also continued lower, reaching structural support near $86.90. The decline may contribute to easing inflation expectations, providing additional context for the move in Treasury yields.

Overhead resistance sits near $93.59 and $94.79. A recovery toward those levels would require buyers to demonstrate renewed strength after the recent decline.

Natural gas held above its rising support structure. A decisive daily close above the declining trendline near $3.19 would strengthen the bullish technical case, while failure to reclaim that level would leave the existing resistance structure intact.

Together, these commodity charts showed that Thursday's selling was not uniform across asset classes. Gold maintained relative strength, while industrially sensitive assets and energy markets faced a more challenging environment.

Bitcoin Price Analysis: $74,911 Support Comes Into Focus

Bitcoin also reflected the broader reduction in risk appetite.

After recovering during the previous session, the cryptocurrency reversed much of that advance as selling returned to equities and other risk-sensitive assets.

Drew described the move as part of a difficult risk-off environment, with Bitcoin struggling to maintain the previous day's gains.

The immediate technical level to monitor sits near $74,911. A failure to hold that area would shift attention toward the lower boundary of Bitcoin's broader rising parallel channel, with the next significant reference near $68,726.

Together, those levels define a potential support region where traders can evaluate whether buyers are beginning to regain control.

On the upside, resistance near $80,524 remains important. Reclaiming that level would represent a more constructive development following the recent reversal.

Bitcoin's reaction also reinforces a broader market observation: despite its longer-term investment narratives, the cryptocurrency can remain highly sensitive to changes in risk appetite.

That relationship becomes particularly relevant when technology stocks and other growth-oriented assets are experiencing sharp declines.

Relative Strength: CPAY, Coca-Cola and Optical Technology Stocks

Although most of Thursday's attention centered on the selloff, several individual stocks displayed relative strength or approached technically interesting areas.

Corpay (CPAY) advanced approximately 6.78% following stronger-than-expected earnings and revenue. The move stood out against the broader market weakness, but it also carried the stock toward the upper boundary of a long-term parallel channel extending back to 2011.

With its weekly RSI near 70.48, the stock was approaching overbought territory.

Drew's technical read suggested that the strength could lead to consolidation or a pullback before another sustained advance. Support near $420 provides a reference point if price begins retracing.

Coca-Cola was another chart discussed in the context of repeated tests of declining resistance. The draft identified six separate tests of a trendline and a potential breakout level near $215.29, with a measured-move objective near $237.42.

Repeated tests can weaken a resistance level, but the eventual breakout still requires confirmation. A decisive close above the trendline would provide stronger evidence than another intraday attempt.

The original draft's company identification and quoted price levels should be checked against Drew's chart before publication.

Meanwhile, several optical technology names were approaching support after significant declines.

Lumentum (LITE) showed an encouraging after-hours reaction following earnings, gaining approximately $7 in the initial response described in the market review. Its chart had approached a 61.8% Fibonacci retracement while RSI moved below 30.

That combination created the potential for a technical rebound, with a previous low pivot serving as an upside reference if momentum improves.

Applied Optoelectronics (AAOI) was also near an important rising trendline around $34.83, with an additional gap-related reference near $38.

For both names, the next regular trading session will be important. After-hours strength can indicate improving sentiment, but the ability to maintain those gains during regular trading provides a more meaningful test.

These stocks offered useful contrasts to the broader technology decline. Some were demonstrating relative strength, while others were approaching levels where selling momentum might begin to slow.

What Traders Should Watch After the November 5 Market Selloff

The technical setup heading into Friday presents competing considerations.

On one side, the breakdowns in SPY, QQQ and SMH indicate that selling pressure has damaged important market structures. Broken trendlines and moving averages can become resistance during subsequent recoveries, particularly when traders use rebounds to reduce exposure.

On the other side, RSI readings below 30 across several technology charts suggest that the declines have become increasingly stretched. When those readings coincide with gap fills, Fibonacci retracements or established pivot levels, the probability of a technical reaction may improve.

The first area to monitor is SPY's support between $729.10 and $729.46, followed by $723.43 if the initial zone fails. For QQQ, $636.60 represents an important downside reference, while $656.09 remains a level to reclaim during a recovery.

Semiconductors will also be important. SMH approaching $427.94 could provide another test of whether buyers are willing to defend established support.

Individual stocks such as SanDisk, Nebius and Western Digital offer additional evidence of how broadly oversold the technology sector has become.

A rebound in these names would be constructive, but a more durable recovery would require improvement across the major indexes and sector ETFs.

Drew's approach is to identify the levels in advance, observe how price responds and use that information to evaluate the next trade. Oversold conditions are one part of the analysis, while price confirmation and risk management remain essential.

Bottom Line: Oversold Markets Still Need Confirmation

Thursday's selloff created a technically important situation for traders.

Technology stocks continued to decline despite lower Treasury yields, major indexes broke support, and semiconductor stocks reached deeply oversold momentum readings. At the same time, several charts moved closer to identifiable technical levels where a rebound could develop.

The market now has to show whether those support levels can attract sustained buying.

Drew's analysis provides a framework for that decision. SPY, QQQ and SMH offer the broader market reference points, while individual technology stocks reveal where selling has become particularly stretched.

The next session may provide an opportunity for a technical rebound, but a bounce and a confirmed bottom are different developments.

For traders, the priority is to monitor the reaction at support, evaluate whether broken levels can be reclaimed, and keep risk defined while the broader market searches for stability.

This article is for educational and informational purposes only and does not constitute financial advice. Technical levels represent potential areas of market interest, not guaranteed price outcomes. Trading and investing involve risk.