In the wake of the midterm elections, traders seemed to make peace with the results – buying initial weakness and sending the Invesco QQQ Trust (QQQ) higher on Wednesday. But what a fake out that turned out to be!
Take a look at my MoneyShow Chart of the Day, which shows the post-election POP in green…followed by the post-post-election FLOP in red! The Nasdaq 100 plunged 6.5% yesterday, erasing a whopping $2.3 trillion in value. AI and chip stocks that led to the upside months ago fell much more, with the iShares Semiconductor ETF (SOXX) plunging 12.1%.
Invesco QQQ Trust (QQQ)
Source: TradingView
The catalyst is no secret: Worries about increased regulation of the AI industry – including moratoriums or delays in data center construction.
With Democrats taking control of both the Senate and the House...and anti-AI measures passing in a wide range of jurisdictions on Election Day…industry growth could slow. That would reduce demand for chips, connectors, power generation equipment, heavy machinery, generators, and more.
Hundreds of billions of dollars in stock and bonds have been sold to raise money for spending tied to the AI boom, too. If regulation or public opposition were to cool growth, or reduce demand for AI compute, then the default concerns already evident in the markets could get worse.
I’ve been flagging technical warning signs in the chip sector for a while. I’ve also written about why traders should pay attention to widening credit spreads. Now, we just saw the biggest Nasdaq meltdown since Liberation Day.
My advice?
- Make sure your portfolio isn’t TOO overloaded in tech stocks, a point I’ve made at multiple MoneyShow events in 2026.
- Keep an eye out for more capitulatory selling, followed by an intraday technical reversal, if you’re looking to trade bounces.
- Remember “This too shall pass” if you’re a long-term investor. Panic selling gives patient investors a great opportunity to get into great stocks at great prices!
