On the evening of November 5, the sell-off in the American market turned into a crash. Chipmaker stocks, Big Tech and cryptocurrencies fell simultaneously. The semiconductor index plunged the deepest of all.
SOX is the chipmaker index. It includes the largest semiconductor companies in the US.
For a trader, this is a day of heightened volatility. Crypto is once again following the indices instead of living its own life.
What did the numbers show?
The picture at 18:56 MSK came together from four minuses at once.
- S&P 500 -3% - the broad US market
- Nasdaq -5% - the technology sector
- SOX -10% - chipmakers
- BTC -5% - Bitcoin
Bitcoin's move came in steps. At 18:03 the market recorded a break below $78,000, and 50 minutes later - already below $76,000.
Why is the market falling?
The sell-off didn't start today. Back on November 4, Big Tech was tumbling: NVDA lost 6%, TSLA - 10%. Today the move accelerated and swept across everything at once, from tech giants to cryptocurrencies.
Two reasons are being cited in the market.
- Fear of an artificial intelligence bubble. The chip sector had risen the most on this theme - and today it fell the deepest.
- Politics. After the election, investors stopped counting on market support from Trump. He is being called a "lame duck," and the saving "Trump pump" is no longer expected.
The artificial intelligence bubble - the concern that valuations of companies in this theme have detached from actual business results.
What does this mean for a trader?
There is a technical detail that makes the move look serious. The Nasdaq broke through its 200-day moving average. Many use this line as the boundary between a rising and a falling market.
The main point: correlation is once again working in one direction. Crypto is following the indices, and on a day like this you can't spread risk between BTC and Nasdaq.
What's next?
Next, people are watching two things: whether the Nasdaq holds below its 200-day moving average and whether SOX continues to outpace the market on the downside.
- US event dates - in the economic calendar
- Trading indices and crypto - find a challenge for your market
Were you watching this crash in the terminal?
A day when SOX is down ten and BTC drops two round thousand in an hour packs an entire monthly range into one session. What stings isn't that you didn't guess the direction. What stings is that behind the idea there was a position of one contract. The notional for this kind of trading is provided by a prop firm: you pass a test of discipline and loss limits, then you work with its account for an agreed share of the result. Days like this come without warning, so it's better to understand the mechanics in advance.