Mon, Nov 9, 2026|Chris Igou

Midterm Jitters Drove a Tech Correction

This essay was originally published in DailyWealth Trader, a daily trading advisory, and has been adapted. To learn more about this service, click here.

A bolt of fear coursed through the markets as America went to the polls...

Last Thursday, the CBOE Volatility Index ("VIX") hit its highest level since April. And according to CNN Business' Fear & Greed Index, the market has been gripped by "extreme fear" since mid-October.

Plus, the American Association of Individual Investors' ("AAII") sentiment survey for the week ending November 4 showed that 48% of individual investors were bearish – well above the 32% historical average.

Traders are bailing on risk assets, and tech stocks have fallen as a result. The tech-heavy Nasdaq 100 Index fell as much as 15% below its peak last week – placing it in correction territory.

The markets now face a critical test. If the Nasdaq 100 recovers, the AI-led bull run can continue. But if this slump persists, it may signal the end of the AI "bubble."

I remain cautiously bullish on the overall market. After an intense four-year rally, the AI trade was due for a breather.

But as I'll explain, some strong technical evidence suggests a rebound is on the way...

History Says the Bottom Is Near

Markets hate uncertainty...

Investors bail on trades when they don't know what to expect. Once there's an outcome – any outcome – markets typically calm down and return to business as usual.

We just got a major dose of uncertainty with the midterms. But with the elections now in the rearview mirror, we may see a quick reversion. Historically, as regular readers know, the year after the midterms tends to be great for stocks.

What's more, stocks are showing some technical evidence of brighter skies ahead...

We'll start with the 200-day moving average (200-DMA), which smoothes out the past 200 days of prices to produce a long-term trend line. This trend line serves as a level of "support" or "resistance"...

When an asset falls to its 200-DMA from above, buyers often step in to drive prices higher. And when it rises toward a falling 200-DMA, sellers take control and drive prices back down. That's why we call it "support" or "resistance."

Since 2023, the Nasdaq 100 has continually found support around its rising 200-DMA. Today, it's testing this uptrend again. Take a look...

Throughout the AI bull run, dip buyers have come to the rescue whenever tech stocks have tested their support. As trend followers, we expect a similar bounce is on the way today.

And there's a second signal suggesting a rebound is on the way... Tech stocks just hit "oversold" status based on their relative strength index ("RSI")...

The RSI shows when asset prices run too far, too fast in either direction. When this indicator dips below 30, it tells us that the asset is "oversold" – in other words, that traders are piling out. A rebound often follows this signal.

On November 5, the Nasdaq 100's RSI dipped to 27. You can see that similar RSI levels in the past have predicted rebounds in the index. Take a look...

The Nasdaq 100 bounced back from similar RSI levels in October 2023, April and August 2024, April 2025, and April and July 2026. So precedent suggests it should rise from here.

Should the plunge in tech stocks deepen or accelerate, I'll revise my view. But today, the signals suggest that the Nasdaq 100 is close to the bottom.

Don't panic-sell your tech positions just because uncertainty is bubbling back to the surface.

The trend is your friend. Stay long.

Good investing,

Chris Igou

Midterm Jitters Drove a Tech Correction

History Says the Bottom Is Near

Further Reading