Did Voters Just Pull the Plug on the Data Center Boom?

Summary

The video argues that the post-election selloff does not yet prove that the data-center or AI investment boom is over. The speaker says political opposition and regulatory uncertainty have increased, but the subtitles identify no comprehensive, objective evidence that operating data centers have caused significant harm to surrounding communities. The speaker also attributes part of the sharp decline to leveraged positions and forced selling, which may have amplified the market’s reaction.

The overall stance is cautious but not decisively bearish: remain open to further declines and shifts in market leadership, but do not overreact to a pullback that is historically common. The speaker favors making incremental portfolio changes as evidence changes and continuing to favor the prevailing uptrend until it is more clearly broken.

Market Evidence and Outlook

• At the November 6 close, the S&P 500 was down 5.65%; another chart described the drawdown as less than 6.5%. The speaker notes that, since 1928, the S&P 500 has had a decline of at least 3% more than seven times in a typical year, and a 5% correction about three to four times a year.
• A rare oversold reading in the QQQ-to-LQD relationship historically preceded stronger QQQ performance over longer periods:
  • QQQ was higher after 6 months in 91% of cases.
  • It was higher after 9 and 12 months in 100% of cases.
  • The cited average gain was nearly 30%; the subtitles do not specify the exact measurement window.
  • Shorter-term results were much less reliable: performance over two weeks to three months was described as roughly coin-flip territory.
• These historical statistics are not a forecast or guarantee. The speaker emphasizes that markets can continue lower even after oversold signals.
• High-beta technology, AI, and semiconductor exposures fell more than the broader market. SMH was down 11% for the week. The speaker says this is expected behavior for higher-beta assets, which can outperform in advances but lose more in declines.
• The speaker sees credit markets as somewhat concerned, but not yet signaling severe stress. A major deterioration in earnings or the economy could change that assessment.
• A possible 2027 peak in data-center capital spending is raised as a scenario to monitor, not as a prediction. A sustained semiconductor decline and breaks of important technical levels would, in the speaker’s view, strengthen the case that the “picks and shovels” trade has run its course.

Technical Framework and Portfolio Approach

The speaker uses charts as conditional evidence—not as guarantees—to judge whether the pullback is a correction within an uptrend or the start of a more serious reversal:

• Track anchored VWAP levels tied to prior highs and lows. These are treated as potential support or resistance and as indicators of where many investors’ volume-weighted cost bases lie. A return below a key level may put those investors at breakeven or at a loss, potentially affecting their decisions.
• Look for clusters of reference points, including anchored VWAPs, prior resistance, moving averages, Fibonacci retracements, and trend lines. The speaker sees denser clusters as more important potential support or pivot areas.
• Use duration below support as evidence. A brief dip followed by a recovery—particularly a V-shaped move—may be bullish; a prolonged stay below key levels raises concern.
• Distinguish a short correction from a sustained bear market. The speaker warns against treating a sharp decline as equivalent to a prolonged downturn such as 2022 or the 2000–02 period.
• Monitor market breadth and leadership, including large-cap growth versus value, equal-weighted stocks, and sector relationships. A shift away from large-cap growth need not mean the whole market is failing; it could create opportunities elsewhere.
• Make gradual, evidence-based portfolio adjustments. The speaker says the scale of defensive action should match the deterioration in the evidence and cautions against overtrading or panicking at ordinary corrections.
• Manage high-beta exposure through position sizing and profit-taking. The speaker says the SMH position was kept relatively small because of its volatility and that some semiconductor profits had been taken. Prior sales were cited on June 23, 2026, twice in July, and again more recently; the speaker says the remaining holdings still had substantial gains.
• The speaker says they do not use leverage and cautions that margin and leverage can make fear and forced selling worse.

Levels and Signals Mentioned

• SPY: The speaker identifies 715 as a level of increased concern if crossed. Anchored VWAP levels from prior highs and lows are described as near-term reference points, not guaranteed support.
• QQQ/Nasdaq 100: The discussion references the 300-day moving average, the 550-day moving average, the 200-day moving average, prior resistance, and 38.2% and 50% retracements. A sustained move into lower “white space” on the charts would raise concern.
• Nasdaq: It had moved through its 200-day moving average and was near a 50% retracement, with a 61.8% retracement also discussed. The speaker says a prolonged decline or break below additional support would be more concerning.
• SPYG, XLK, and related growth/technology charts: Several key support areas are described as still intact, but the speaker notes relative weakness in some growth-versus-value comparisons.
• SMH and semiconductors: A topping pattern is acknowledged as a possibility, but the speaker cautions that a chart resembling an earlier peak does not mean the outcome will repeat the 2000–02 bear market.
• JNK high-yield bonds: The speaker sees no major change versus earlier selloffs, but identifies a further move into a lower chart area as a reason for greater concern.
• IEF Treasuries relative to SPY: The relationship is described as still showing a downtrend. A sharp reversal would be more consistent with worsening earnings, economic weakness, or deflationary pressure.
• WTI relative to the S&P 500: The speaker says the current chart does not resemble the sharp move seen in early 2022, but notes a subtle change worth watching.

Assets, Tickers, and Benchmarks Mentioned

• ETFs/tickers: SPY, SPYG, QQQ (“Triple Qs”), LQD, IWD, RSP, MGK, JNK, IEF, XLK, AIQ, RSPT, XLC, SMH, XLE, and VUG.
• Indexes/benchmarks: S&P 500, Nasdaq 100, Russell 1000 Value, S&P Composite 1500, Dow, NYSE Composite, and the equal-weighted S&P 500.
• Other assets/sectors: 7–10-year U.S. Treasury bonds, investment-grade and high-yield corporate bonds, West Texas Intermediate (WTI) crude oil, technology, AI, data centers, semiconductors, energy, consumer staples, growth stocks, and value stocks.

Disclosures

The video states that it is for informational purposes only, is not investment advice, and is not an offer or solicitation to buy or sell securities or financial instruments. It says views may change without notice; CCM and its officers, partners, or clients may have interests in securities or derivatives discussed; CCM accepts no liability for losses arising from use of the material; and viewers should consult a licensed, qualified professional before making investment decisions.

Presenter/source: The video is from Ciovacco Capital; the disclaimer names Ciovacco Capital Management LLC (CCM). No individual presenter or specific Wall Street research firms are identified in the subtitles.