Nasdaq 100 Outlook: Broadcom Extends Slide, Palantir Reversal Signal

The Nasdaq 100 has turned lower at a critical juncture, with renewed concerns over AI funding pressuring heavyweight tech stocks. Broadcom’s post-earnings slide and emerging reversal signals in Palantir suggest downside risks are building for the index, raising questions over whether this year’s seasonal Santa rally will materialise at all.

View related analysis:

Nasdaq 100 Technical Outlook: Wave C Risks Build

The Nasdaq 100 led Wall Street lower on Wednesday as concerns over AI funding continued to weigh on the tech sector. The index is now on track for a second bearish week after forming a bearish hammer near record highs in November — a warning signal that upside momentum was stalling.

A bearish engulfing candle formed last week to suggest the end of wave B has been seen, and that the recent selloff is the earlier stages of a wave C of a simple ABC correction. Assuming wave equality (where the length of wave C equals wave A), the Nasdaq could be headed down towards 26,300, just above the 2024 high of 23,364.

Also note that the two heaviest volume bars on the weekly chart are both bearish bars, the most recent being last week’s bearish engulfing week. And that Wednesday’s bearish engulfing day respected the 50-day SMA as resistance, was also on high volume, and precede by a bearish divergence on the daily RSI (2).

Chart analysis by Matt Simpson, Source: NYSE, TradingView

Nasdaq 100 Market Snapshot: Volatility and AI Drag

The -1.9% decline was its worst daily fall in 18 sessions and the most volatile in 16
This strengthens the case for an ongoing ABC corrective move, with price action now consistent with a wave C decline
Over the past three months, Thursday has averaged a 400-point daily range, rising to 409 points on Fridays
Oracle (ORCL) fell 5.4% to a six-month low after reports that Blue Owl, its largest data-centre partner, will not back a US$10bn deal for a new facility
Nvidia (NVDA) slid 2.3% to a three-week low, aligning with the bearish bias flagged in late November; it currently shows a strong 20-day correlation of 0.94 with the Nasdaq 100
Broadcom (AVGO) dropped 4.4%, taking weekly losses to 9.4%, and now shares an almost perfect 20-day correlation of 0.97 with the Nasdaq 100

Chart analysis by Matt Simpson - data source: NYSE, TradingView

Broadcom (AVGO) Share Price Weakness Weighs on Nasdaq

Last week’s earnings beat failed to impress investors, with Broadcom (AVGO) now down over 20% from its record high — pushing it into bear market territory. The sell-off has been marked by large bearish candles on heavy volume, often close to twice the 20-day average, signalling aggressive distribution rather than routine profit-taking.

AVGO printed a bearish engulfing candle on Wednesday, driving prices down to the October low. Given its strong correlation with the Nasdaq 100, this price action raises broader concerns for the tech sector and casts doubt over the likelihood of a traditional Santa rally this year.

While a short-term bounce from current levels remains possible, the risk is that bears fade any recovery. A break below 300 would bring the 200-day moving average near 280 firmly into focus.

Chart analysis by Matt Simpson - data source: TradingView

Palantir (PLTR) Reversal Signal Near Key Resistance

I’ve been looking for the recent rally in Palantir (PLTR) to falter over the past couple of weeks, and Wednesday’s price action suggests it may finally be doing so. A bearish opening marubozu candle formed, with the session opening at the high and closing near the low — effectively a bearish engulfing day.

The signal carries more weight given it formed near the August high and the October VPOC. This aligns with other warning signs, including a bearish RSI divergence and above-average volume on the day, both consistent with a potential reversal at resistance. It also follows last week’s narrow-range doji at the same level, reinforcing the idea of buyer exhaustion.

Bears could fade rallies into Wednesday’s range while prices remain capped below 190, keeping downside risks open. There is a visible gap just below 170 that could attract price, ahead of stronger support near the 200-day SMA and the prior swing low around 150.

Chart analysis by Matt Simpson - data source: TradingView

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.