The S&P 500 and Nasdaq rose on Monday, while most stocks outside AI and technology declined. Buying in chip stocks also lost strength after the open. Today I will watch whether gains spread to more companies and whether buyers stay through the close.

Demand for artificial intelligence may persist, but how those investments are financed is a separate question. During earnings week, I care about cash to cover spending and debt as well as sales expectations.

Key takeaways

  • A rising index and a stronger average stock are different things. Buying in large technology companies can mask losses elsewhere, so it matters whether sectors move together.
  • CNBC’s Mad Money host Jim Cramer highlights borrowing costs through the example of data center company CoreWeave. Even if demand for data centers stays strong, expensive debt can limit the profit an investment leaves for the company.
  • Gold traded at about $4,120 per troy ounce this morning. Financial analyst Tunç Şatıroğlu (@tuncsatiroglu) retains his recovery view but is waiting for a break above $4,200 before considering new buying. One of his concerns is that Treasury yields could rise again.

What happened?

  • According to AP’s October 19 closing report, the S&P 500 rose 0.4% and the Nasdaq Composite gained 1.1%, while the Dow fell 0.1%. Most stocks outside AI and technology declined.
  • Asian markets remained cautious this morning. AP reported losses in Japan, Australia, South Korea and Hong Kong, while Shanghai was little changed. The U.S. technology rally has yet to find the same response across countries and sectors.

What changed since yesterday?

  • Yesterday I was looking for buying after Friday’s selloff to hold and spread across sectors. The initial rebound arrived, but buying in chips lost strength after the open and most stocks outside technology fell. The conditions I need to see before treating the rise as a stronger recovery have therefore not yet been met.

Market levels

U.S. indexes and technology

  • SPY ($SPY), which tracks the S&P 500, finished Monday at $766.48. The day’s $765.82 low is a nearby support candidate, and its $770.46 high is the first resistance candidate. Losing the lower boundary would narrow the ground gained from the previous day; breaking the upper one would matter more if buying lasted through the close.
  • QQQ ($QQQ), which tracks the Nasdaq 100, closed at $718.36. $716.57 is a support candidate and $724.55 a resistance candidate; that range is the nearby area to watch in the new session. A retreat near the upper boundary would have a different implication from a break followed by a sustained hold; a positive open alone will not be enough.
  • Semiconductor ETF SMH ($SMH) opened at $556.73 and closed at $548.46. $547.44 is a support candidate and $558.56 a resistance candidate. Finishing near the day’s low shows how much the rebound from Friday weakened during the session. Clearing the upper area would be a more meaningful step toward renewed buying strength.
  • IGV ($IGV), an ETF that tracks software companies, closed at $105.99; $104.96 is a support candidate and $106.53 a resistance candidate. I would first look for the lower area to hold, then for a break above the upper boundary. Software clearing its own resistance alongside a chip recovery could broaden participation within technology.

Metals and crypto

  • Gold ETF GLD ($GLD) finished Monday at $379.69, near the day’s $379.12 low. That low is a nearby support candidate, while the roughly $381.93 high is the first resistance candidate. Buying that fails to clear the upper area will remain within the previous session’s range; losing the lower boundary would increase the risk of a continued decline.
  • Silver ETF SLV ($SLV) closed Monday at $51.54; roughly $51.52 is a support candidate and $51.94 a resistance candidate. A close near the day’s low limits the strength of the small daily gain; a recovery would need buying to reach the upper area.
  • Bitcoin traded at about $81,885 this morning, above Monday’s $81,643 low and below its $83,075 high. Those endpoints of the completed day are nearby support and resistance candidates. The lower area needs to hold first; clearing the upper boundary could signal a stronger recovery than merely stopping the decline.

Red flags

  • Companies’ financing costs can rise even while AI demand stays strong. A new order does not automatically change a debt maturity or the interest bill; sales growth and cash generation need to be read together in the results.
  • A renewed rise in oil prices could increase companies’ expenses and inflation concerns. That could also delay the interest rate relief needed to sustain buying in technology.

Calendar

  • October 20: Netflix’s third-quarter results are due after the U.S. session. Its outlook matters alongside expectations for the results.
  • October 21: Tesla’s third-quarter results are due after the U.S. session. The conversion of sales into profit and cash matters.
  • October 22: The Turkish central bank’s interest rate decision is the week’s main local event for borrowing costs and the lira outlook.
  • October 27-28: The Federal Reserve’s interest rate meeting (FOMC), the next decision that could alter rate expectations for technology stocks and precious metals.

My analysis

Today I will look beyond whether an index is positive, paying attention to the number of rising stocks and the part of the session when buying fades.

To become more positive, I would want companies to generate the cash needed to support their investment plans and prices to back that up. Strong results accompanied by broader participation and gains held through the close would increase my confidence in the recovery. If spending grows while financing becomes more expensive and good news produces only brief buying, I will remain cautious about a company’s ability to refinance its debt even if its stock becomes cheaper.

Sources

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