Chip stocks fell sharply during October 12-16, and selling spread to software shares as the week ended. If prices rebound in the new week, I will watch whether buying is broad enough to recover the losses.

Claims of tanker fires around the Strait of Hormuz add to uncertainty over energy costs. Companies could face both expensive energy and financing burdens. A few days of rising share prices would not resolve either problem.

Key takeaways

  • The size of the technology selloff does not provide a reason to buy on its own. A rebound that spreads across sectors and holds through pullbacks would be more meaningful.
  • Bonds attracted buying while silver fell. Even assets considered defensive responded differently to energy, interest-rate and growth risks.
  • Earnings reports will need to show more than sales growth. Profit after costs and companies' outlooks will matter too.

What happened this week?

  • Between the October 9 and October 16 closes, the semiconductor ETF SMH ($SMH) fell 10.53%, the Nasdaq 100 fund QQQ ($QQQ) lost 5.52%, and software-company fund IGV ($IGV) declined 7.39%. SPY, which tracks the S&P 500, lost 1.97%. The damage in technology was greater than the broad market's relatively modest decline suggested.
  • The U.S. consumer price index (CPI), which tracks the prices consumers face, rose 0.6% in September and 3.7% from a year earlier. The producer price index (PPI), which measures producers' selling prices, increased 1.3% for the month. These indexes measure different prices. Strength in both makes it important to assess how much of their costs companies can pass on to customers.
  • On October 17, Iran's Revolutionary Guards claimed that mines had caused fires on two tankers in and around the Strait of Hormuz. The claims, reported by Euronews and Anadolu Agency, leave the ships' identities and the scale of any impact on oil flows unclear.
  • In his October 17 commentary, financial analyst Tunç Şatıroğlu (@tuncsatiroglu) said he expected a rebound lasting a few days, followed by renewed selling through the end of October. That is Şatıroğlu's conditional outlook, not a timetable that determines when the decline will end.

What changed since the start of the week?

  • In the October 12 note, the question was whether crypto's rally could withstand the upcoming inflation figures. We have those data now, and chips and software have fallen more than the broad market. The early-week attempt at recovery did not turn into a sustained technology rally.

Market levels

Oil

  • December Brent futures were around $109.9 on Friday, near the upper end of the day's roughly $105-$110 range. Around $105 is a candidate support area. Sustained trading above $110 could add to energy-cost pressure. Daily boundaries are not long-term targets.

U.S. equities

  • SPY closed Friday at $763.25. Holding the $760.64 low matters for a near-term attempt to establish support. Recovering the $773.25 intraday high will be the rebound's first resistance test.
  • QQQ's $709.80 close was near Friday's $707.23 low. Losing that candidate support would increase the risk of further selling. The first candidate resistance is $725.96; moving above it would recover more of the final session's decline.
  • SMH finished the week at $539.79. The low around $539.07 is the first candidate support, while Friday's high of $554.68 is a candidate resistance. Reaching it would not recover the entire weekly loss.
  • IGV last closed at $104.34. The daily low around $103.73 is a support candidate; a break below it would weaken the attempt to recover in software shares. A move above $110.51 could provide initial confirmation of a recovery.

Bonds and metals

  • TLT ($TLT), which tracks long-term U.S. Treasuries, gained 2.65% for the week to $80.05. Friday's approximate $79.67-$80.31 range provides near-term support and resistance candidates. Buying in a bond fund does not establish that risk has fallen across all assets.
  • Gold fund GLD ($GLD) closed at $382.01. Friday's $380.89 low is a nearby support candidate. The $384.88 high is the resistance test above; moving past it would support the view that buying is strengthening.
  • Silver fund SLV ($SLV) was at $51.51, taking its weekly loss to 5.97%. The low around $51.36 is a nearby support candidate. Recovering $52.33 is the first confirmation condition for a recovery; silver does not have to move at the same pace as gold.

Crypto

  • Bitcoin was around $81,633 this morning. Recovering and holding above the previous daily high of roughly $81,700 is the first confirmation threshold for the rebound to continue. Around $80,700 is a candidate support area below.
  • Ethereum was around $2,409. The previous day's $2,438 high is the first candidate resistance above. Losing support around $2,355 would weaken the case for fresh buying. These short ranges do not, on their own, establish that a lasting reversal has begun.

Red flags

  • If the tanker claims turn into actual shipping disruption, energy costs and risks to corporate profits could rise. Statements alone do not establish the state of physical oil flows.
  • A rebound after heavy selling can come from new buyers or investors closing positions that profited from falling prices. In the latter case, the move may be more fragile.

Calendar

  • Tuesday, October 20, after the U.S. close: Netflix financial results.
  • Wednesday, October 21, after the U.S. close: Tesla earnings.
  • Wednesday, October 21: U.S. weekly oil inventories, providing fresh information on supply and demand.
  • Thursday, October 22: The Central Bank of the Republic of Türkiye's Monetary Policy Committee interest-rate decision.

My analysis

I do not read this week as proof that demand for artificial intelligence has disappeared. A strong technology outlook, however, does not justify every share price. When relating future sales to today's valuations, I am placing more weight on how much profit and cash those sales can generate.

First, I will look for chips and software to recover together, then for that buying to hold through the close. Calmer oil prices and earnings reports showing costs under control would strengthen the picture. If only a handful of large stocks rise, I will not assume that the broader market is strengthening too. If new lows form, I will maintain a cautious assessment despite an initial bounce.

Sources

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