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Nasdaq 100 futures edged lower along with European markets in the first half of Thursday’s session. The tech sector hasn’t had a great start to the year, after the entire gains for the year were wiped out in the last couple of days, although it is far too early to suggest markets have topped.
In early trading, some support for AI-related infrastructure stocks like Broadcom (NASDAQ:AVGO), following Alphabet’s (NASDAQ:GOOGL) much bigger-than-expected spending plans, was evidenced, even though the Google parent itself slipped around 2.5%.
Markets are still debating whether the recent pullback in tech has gone too far, with the sell-off largely driven by worries around AI disruption, stretched valuations, and the sheer scale of capital spending across the sector.
At the same time, money has been rotating into areas that are more directly exposed to stronger economic growth. So, it is not an outright bearish trend for markets, more like sector rotation. Will that change? Time will tell, but the charts will have to show a clear reversal sign to convince me.
Software stocks have taken the biggest hit, with a number of names now sitting deep in oversold territory. That does open the door to some dip buying, which could help breathe a bit of life back into the Nasdaq after its recent slump.
But for now, the sector remains under pressure. Alphabet, Arm (NASDAQ:ARM), and Qualcomm (NASDAQ:QCOM) all beat expectations on earnings and revenue, but that wasn’t enough to stop their shares from falling ahead of the open. Google was down more than 2% in premarket, while Arm was off 7% and Qualcomm was sliding more than 10%.
Despite that, some of the attention has been on Google’s decision to double its AI spending, which has provided a boost for chip stocks more broadly.
Looking ahead, the macro focus today is on second-tier US jobs data. Weekly jobless claims have been fairly subdued recently, hovering around 210,000, but the real interest is likely to be in the December JOLTS report later on. In particular, traders will be watching the layoffs data to see whether the so-called no-hire, no-fire economy is starting to show signs of cracking.
Also pressuring the technology sector has been the ongoing weakness in cryptocurrencies. Today, Bitcoin slid below $70K to hit its lowest levels since November 2024, while Ethereum dropped to its lowest point since May 2025.
The Nasdaq 100 hasn’t really moved much over the last few months after peaking in October around 26,399. Since then, the index has been consolidating its prior sharp gains, as technology stocks took a back seat while the rest of the market caught up.
However, it’s far too early to suggest that the technology-heavy index has topped out, given that no major support areas have broken down and we haven’t seen any significant reversal patterns emerge on the chart. This is therefore a market that is continuing to consolidate rather than trending decisively lower.
That could change in the weeks ahead, but for now, the onus is on the sellers to emerge and show their presence. So far, the mild selling pressure is notable, but it’s not really strong enough to suggest that the trend is turning bearish.
In fact, the Nasdaq is now approaching or testing a key area of support between 25,000 on the upside and 24,700 on the downside. This is a major short-term area of support, as we have prior lows there, for example in mid-December and earlier this year. We also have a bullish trendline coming into play in that region as well. So, this area really needs to hold for the bulls to maintain full control of price action.
Eventually, the consolidation will end, and we will see a decisive break in either direction. Given the prior bullish trend and the still supportive macro backdrop, my view is that the bulls remain in control, despite what some may see as a potential top in the market. Time will tell, but for now I’m giving the bulls the benefit of the doubt, even though the index has come under pressure in the last few days.
On the upside, initial resistance comes in around 25,220, marking the low from Tuesday, when the index took a drop. Above that 25,440ish is the next important level to watch, before eventually the focus returns to the longer-term resistance are between 25,900-26,000.
