Software and semiconductor companies sold off sharply in Friday's U.S. stock market. The software-company fund $IGV fell 4.80% and semiconductor fund $SMH lost 3.41%, while Brent's approach to $110 makes both a technology recovery and energy costs important to watch next week.

After this selloff, the strength of the first rebound will be Monday's central question. Holding Friday's lows could help the selling settle down; reclaiming the session highs would be a more meaningful sign of the recovery's strength.

Key takeaways

  • Semiconductors alone may give an incomplete picture of a recovery. Software stocks joining Nasdaq 100 tracker $QQQ would matter for a more balanced technology rebound; one strong stock does not represent the whole sector.
  • Sustained high oil prices can raise companies' transport and production costs and reduce consumers' spending power. Lower energy prices could therefore provide meaningful relief for a stock-market recovery as well as for the oil market.
  • Bonds and precious metals did not move together. The long-term U.S. Treasury fund edged higher while gold and silver funds fell, a reminder that even assets considered defensive need to be assessed separately.

What changed since yesterday?

  • Software fund IGV closed at $109.60 on Thursday, then fell to $104.34 on Friday. Software joining the continuing semiconductor weakness shows that a divergence within technology has turned into selling across both groups. Next week, I will first watch whether the two can recover their losses together.

What happened?

  • Associated Press (@AP) reported that the S&P 500 fell 1.1% and the Nasdaq Composite lost 2.1% at Friday's October 16 close. S&P 500 tracker $SPY fell 1.11%, while IWM, which tracks small U.S. companies, lost 1.69%; selling extended beyond large technology companies.
  • December Brent futures were quoted around $109.9 on Friday. I do not see this oil price as the sole cause of the technology selloff. However, expensive oil can make disinflation harder; weaker expectations for interest-rate cuts also matter for companies valued on their future profits.
  • On October 16, U.S. President Donald Trump waived new duties and some sanctions under the Graham Act concerning Russia and Iran. The order preserves the specified pre-existing Russia sanctions. This step may reduce the risk of additional energy-trade restrictions; it does not by itself ensure that more oil is physically transported.

Market levels

Global risk and oil

  • December Brent futures are around $109.9, near the top of Friday's roughly $105-$110 range. Around $105 is a daily support candidate; above $110 is the threshold to watch for energy-cost pressure. These are the last day's price boundaries, rather than long-term targets.

US indices

  • SPY closed Friday at $763.25. Finding support at the day's $760.64 low matters; a break below it increases the risk of extended selling. Clearing the $773.25 high would provide stronger confirmation of a recovery from Friday's losses. I distinguish that second condition from an initially positive opening.
  • QQQ ended at $709.80, in the lower part of Friday's range. The day's $707.23 low is the first support candidate; I am watching its $725.96 high for confirmation above. Reclaiming this upper boundary would mean more of the intraday selling has been absorbed; a small move off the low alone does not make a strong recovery.

Themes and ETFs

  • SMH closed at $539.79, very near its $539.07 daily low. I will watch whether support forms at that low; Friday's $554.68 high is the first upper confirmation boundary. The lower end needs to hold first, followed by continued buying at higher prices.
  • IGV last closed at $104.34. Friday's low was $103.73 and its high was $110.51; those two extremes are daily support and resistance candidates, respectively. Reclaiming the upper boundary would be a stronger recovery measure than a small bounce.
  • TLT, the fund tracking U.S. Treasuries with maturities above 20 years, rose 0.10% to $80.05. Friday's $79.67 low is a daily support candidate; a break above $80.31 is the confirmation to watch for stronger buying. This small daily gain does not establish what the Fed will decide about rates.

Crypto and precious metals

  • Gold fund $GLD closed at $382.01. I am watching for support at Friday's $380.89 low, with its $384.88 high as the upside confirmation threshold. Buying needs to strengthen again to clear the upper end. The fund's share price is distinct from the price of an ounce of gold.
  • Silver fund $SLV closed at $51.51. The $51.36 lower end of Friday's range is a daily support candidate; $52.33 is the upper threshold. Losing the lower boundary would mean a new low; reclaiming the upper boundary would be more meaningful for easing weakness in the silver fund.
  • Bitcoin is around $81,443 this morning. The completed Friday low of $80,707 is a support candidate, while the $82,836 high is the upper threshold. I am watching a hold above the lower boundary separately from a break above the upper one. Crypto trading over the weekend does not mean the same move will carry into equities on Monday.
  • Ethereum is trading around $2,424. The previous completed day's $2,391 low is a daily support candidate; its $2,490 high is the confirmation boundary to watch for a broader recovery. Staying inside this range does not mean Friday's selling has been fully reversed.

Red flags

  • If buying remains confined to a few large stocks as technology funds move off their lows, the recovery may struggle to spread across the market. That is why I am watching software and semiconductors together; simultaneous new lows in both would be more concerning.
  • Rising oil alongside falling bond prices would create a scenario in which energy and borrowing costs apply pressure together. If that combination develops, lower share prices alone would offer insufficient reason for confidence.

Calendar

  • October 21, 17:30 TRT: the U.S. Energy Information Administration's weekly petroleum report. Supply and refinery activity, alongside inventory changes, will matter when assessing high oil prices.
  • October 27-28: the Fed's interest-rate meeting (FOMC). Energy prices and changes in the inflation outlook will matter ahead of the decision.

My analysis

The technology selloff has become too broad to explain through semiconductors alone. Software's sharper decline also raises the question of how much investors are paying for companies' future profits. Still, one day's price action does not prove that every technology company's business has deteriorated to the same degree; earnings results and stock prices need separate assessment.

Next week, I will assess the recovery in three steps: first, whether Friday's lows hold; then, whether buying spreads across software and semiconductors together; finally, whether oil eases its cost pressure. Improvement in that sequence would be more convincing than a brief rebound after a steep fall. If oil stays high and technology funds make new lows, I will reassess the recovery outlook.

Sources

This is not investment advice; it is a research and monitoring note.