Nasdaq 100 forecast: Indices drop with Nvidia, but will dip buyers step in?

The Nasdaq fell back around 2% shortly after the open, before bouncing off its lows at the time of this writing. The recent trend for the tech heavy index and other major global indices has been bullish, so today’s drop comes somewhat against the run of play. But after Nvidia’s latest earnings report failed to keep markets underpinned, the real question now is simple: Will the bulls step in to buy this latest dip, or are we setting up for a more significant drop? Today’s close could determine the near-term direction and have a big say in the near-term Nasdaq 100 forecast.

 

 

Nvidia tumbles post earnings

 

One of the main factors the bulls were hoping to trigger the next upsurge in stocks this week was clearly Nvidia’s earnings.  The company delivered strong numbers last night. Revenue beat expectations as AI demand remained firm. And that helped to further calm some of the recent anxiety around tech valuations.

 

Nvidia stock and index futures reacted positively initially after the results, before taking a drop today. Nvidia was now down around 4%, weighing sharply on the Nasdaq.

 

But Europe certainly remained strong where more records were reached for some of the major indices like the FTSE. So, while global risk appetite has remains strong, it hasn’t been a euphoric surge across the board.

 

Yes, Nvidia impressed with its results, but markets had already priced in a lot of optimism. It looks like US investors are still asking questions about sustainability. How long can AI infrastructure spending grow at this pace, and what happens as competition intensifies, are the sort of questions they are asking themselves.

 

Broader risk appetite is still strong

 

The broader tone remains risk-on outside of the Nasdaq, as has been the case since markets bounced back on Tuesday. That came after some of the recent AI disruption nerves were soothed by Anthropic revealing a number of new partnerships. European stocks edged higher to extend their record-breaking rally. Boosted by Rolls Royce, the FTSE hit a new record high today, while the German DAX index reached a fresh weekly high.

 

Nasdaq 100 forecast: Technical analysis

 

Technically, we’ve had a clean upside break after several days of tight consolidation. The close near the highs looked like a bullish signal until the reversal today. Now the focus shifts to support levels, and whether we will see the market bounce back as we head deeper into the US session.

 

 

The key level to watch is around 25,000 on our US Tech 100 chart, which is based on the underlying Nasdaq 100 futures. At the time of writing, this level had taken out for now. But can we see a recovery and a close back above this hurdle?

 

But a potential close below 25,000 psychological line today would start to weaken the bullish case. There is a short term trend line to watch below here and the next key support is at 24,650. Bearish below. 

 

On the upside, the next resistance zone sits near 25,400, where the index sold off from today. Above that, 26,000 could be next.

 

So, what’s the base case for me?

 

Given the recent strong trend for stocks globally, I’d still give the bulls the benefit of the doubt. But they will need to show up here and fast to keep the path of least resistance higher. We may have seen more than just a modest pullback today. But in volatile markets, even moves of 2% is not too abnormal.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R