Nasdaq 100 Struggles to Find Its Footing

The Nasdaq 100 is attempting to stabilize in today's session, but the foundation appears fragile. The primary driver is not the broader economic outlook but a sharp rotation within the technology sector itself, where investors are aggressively buying winners and dumping losers. The key question is whether the current earnings season will provide sustained support for the index or if the recent sell-off is merely taking a brief pause.

Market movements are currently being dictated more by individual corporate results than by overarching "market" trends. This divergence is creating significant nervousness. While some stocks post double-digit gains following their reports and guidance, others are sliding despite solid numbers if their outlook disappoints. This high level of dispersion explains the index's potential for rapid shifts in sentiment.

Notable examples highlight the trend. Advanced Micro Devices (AMD) shares sold off sharply despite beating profit expectations, as investors deemed its forward guidance too weak and raised concerns about its competitive position in the AI chip race. Conversely, stocks like Enphase Energy rallied strongly on the back of robust quarterly figures and forecasts. Meanwhile, an acquisition agreement propelled Silicon Laboratories' stock price upward.

A Rotation, Not a Broad Rally

The action resembles a forceful sector rotation rather than a widespread uptrend. Money is flowing out of highly-valued software names and certain semiconductor segments and into areas demonstrating fresh positive momentum. This dynamic is also visible in the options market, where heightened demand for puts on AMD and Palantir contrasts with significant call interest in Eli Lilly and Enphase. This pattern suggests active portfolio repositioning, not the beginning of a calm, broad-based recovery.

The interest rate environment remains a crucial factor. Higher yields on U.S. Treasury bonds act as a headwind for technology valuations, as they increase the discount rate applied to future earnings. While easing inflation in Europe provides a supportive backdrop, the central question for U.S. tech remains: To what extent will bond yields cap the recovery?

Should investors sell immediately? Or is it worth buying NASDAQ 100?

Technical Perspective: A Nearby Hurdle

Following Wednesday's pronounced pullback, the short-term technical damage is significant. Although pre-market trading points to a technical rebound, the next resistance zone is relatively close at hand. A failure to break through this barrier could trigger a swift move back toward recent lows.

Key takeaways from the analysis:

• Volatility Driver: Quarterly earnings reports and corporate guidance, not macroeconomic data.
• Market Structure: Extreme divergence between winning and losing stocks (a "dispersion trade").
• Technical View: A rebound from oversold conditions, but momentum remains impaired.
• Forward Look: The 25,200–25,250 zone represents the first major hurdle. Trading below it keeps retests of the recent lows a realistic scenario.

Underlying caution is reflected in the provided price data. The index is currently trading approximately 4% below its 7-day level and beneath its 50-day moving average—an indication that the recovery has yet to rebuild confidence.

The U.S. market open will be pivotal in determining whether the Nasdaq 100 can carry its rebound above the cited resistance area. If it fails, the market could very quickly retest the region around the recent lows. A sustained breakout to the upside, however, would open the path for a move toward the 25,400 area.