The technology-heavy index is displaying signs of fatigue as Monday’s trading session witnessed notable declines, primarily driven by weakness in the artificial intelligence sector. These previously high-flying stocks are now exerting downward pressure on the benchmark, with investors adopting caution ahead of significant quarterly earnings reports and economic data releases scheduled for this week. Technical chart patterns simultaneously suggest a potential shift in market direction.
Technical Indicators Flash Warning Signals
From a technical perspective, concerning signals are emerging regarding the sustainability of the upward trend. The NASDAQ 100 has broken below its short-term ascending trend channel and is currently encountering resistance near the 25,150-point level. Adding to the cautious outlook, the Relative Strength Index (RSI) is trending downward, a classic warning sign that often precedes further price declines.
The coming trading sessions will prove critical for determining the market’s next move. The key question is whether support levels at 24,655 and 24,490 points will hold firm. The increased market volatility, reflected in a rising VIX index, clearly indicates growing investor nervousness about the potential for a continued downtrend.
AI Sector Strength Shows Cracks
Artificial intelligence stocks, the undisputed market leaders for months, are now facing significant pressure. NVIDIA, a major component of the index, saw its shares decline by 1.8%, extending its recent losing streak. This pronounced weakness within the semiconductor sector potentially signals the beginning of a rotation away from the growth stocks that have propelled the market higher throughout the year.
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In stark contrast to the broader technology weakness, Alphabet delivered an impressive counter-performance. Its stock jumped 3.11% following the disclosure that Berkshire Hathaway had established a substantial position in the company. This development provided a welcome positive note amid otherwise gloomy trading conditions for the tech sector.
Market Awaits Crucial Data and Earnings
This week’s market narrative will be heavily influenced by a wave of fundamental data. All eyes are on NVIDIA’s quarterly earnings report, widely regarded as a key sentiment indicator for the entire AI sector. Concurrently, delayed U.S. economic indicators are due for release, including the September jobs report, which could significantly influence monetary policy expectations surrounding the Federal Reserve’s next moves.
While futures markets point toward a modest recovery, the central uncertainty remains: Is the current pullback merely a healthy pause following the index’s strong year-to-date advance of over 18%, or is the technology sector facing a more profound consolidation phase?
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