Nasdaq 100 Futures are at a critical support level before Big Tech’s earnings. Investors and traders will keep a keen eye on developments as the largest tech companies of the nation announce their quarter reports this week.
The daily chart shows the current situation.
On the chart you can see that the price has been testing the same key area of support for a third time.
In April and May, the trendline has already been tested and it bounced back successfully.
Lightning strikes twice
The Nasdaq drop of April is interesting because it occurred in the same week that many Nasdaq constituents announced their earnings. The market is testing for any signs that the AI rally will fizzle out. It keeps on going.
This event can lead to two conclusions. If tech companies announce strong earnings it could spark a new rally.
These strong earnings are only possible because of the growth of AI infrastructure. It boils down then to an AI bet.
Second, this is the scariest scenario. If the earnings are disappointing, then it may trigger a sell-off that wipes out all of your gains from the past two years.
It is a fact that since 2022, the ‘Magnificent Seven’ have been the driving force behind the stock market rally. These stocks are only able to increase in value because of the development race for AI technology.
What happens then if AI growth slows down? What happens if the AI growth stops?
In comparison with tech, they’ve been relatively flat over the past two years. They’re not likely to rebound in light of the disastrous earnings from tech. It could have a disastrous effect on the American stock exchange.
Who is the key holder?
Taiwan Semiconductor, a manufacturer of AI chips, has confirmed the increase in AI expenditure.
Chip stocks, however, have suffered a serious blow in the past month. AMD’s earnings today after the market close will therefore play a key role, even if it is a minor one, to help the index regain some support.
Microsoft will also be announcing its results later on today. It is frightening to think that Microsoft is expecting to announce a quarterly revenue increase of 15 percent.
Microsoft, the Nasdaq’s second largest constituent, will most likely crash the stock market if they miss their targets.
Apple Inc. and Amazon, which are the four largest weighted constituents of the index, will both announce their earnings reports on Thursday night.
The next two days will not be for those who are weak-hearted. The next two trading days will be a battle between bulls and bears. This fight will have a lasting impact on the markets for at least the next three months.
Which stocks are the most important in this post Nasdaq testing key support levels? This post may change as new information becomes available
