NASDAQ selloff: where next for NASDAQ futures after worst day since 2022?

The Tech trade shown the door

US equity markets finished in a sea of red overnight, led by the tech-heavy Nasdaq (-3.65%), which recorded its worst daily performance since the dark days of the 2022 tech wreck. The S&P 500 closed the day down over 2% for the first time in 357 trading days, while the Dow Jones cratered 722 points, retreating below 40,000.

• Tesla

Behind the rapid deterioration in risk sentiment were underwhelming earnings reports from tech giants Tesla and Alphabet. Tesla investors were unwilling to let the lack of detail around its self-driving vehicle or margin compression go unpunished, as it finished an eye-popping 12.33% lower at $215.99. After rejecting trend channel resistance at $270 two weeks ago, it is now eyeing support at $205.00, coming from the 200-day moving average.

Tesla daily chart

• Apple

Elsewhere, Apple's pullback from its mid-July high of $237.23 deepened as it fell to an intraday low of $217.37 before closing 2.88% lower at $218.54. If the pullback in Apple's shares extends ahead of its earnings report due on 1 August, we expect its share price to be well supported between $210 and $200, where it broke higher from in early June after its WWDC update. We are aware that a sustained break below $190 would be problematic and warn that a deeper decline is underway.

Apple daily chart

Chip stocks were also in the firing line, as Super Micro Computer lost 9.15% to $711.56, and Arm Holdings dived 8.1% to $157.68. AI poster child Nvidia lost 6.80% to $114.25, and it is eyeing important support at $110.00.

• Nasdaq 100 technical analysis

In our Wall Street update from the 15th of July, we noted the formation of a weekly "loss-of-momentum" candle. We said that the formation of a "loss-of-momentum" candle is a warning sign awaiting a trigger to indicate that a correction is underway. In this case, we mentioned the trigger would be downside follow-through below 20,000.

After breaking below 20,000 and then plunging below daily uptrend support at 19,500/400, a high degree of technical damage can be observed. We look for the decline in the Nasdaq 100 to deepen towards weekly uptrend support and the March high in the 18,500/400 area. We are aware that the Nasdaq 100 needs to reclaim resistance at 20,000 to ease downside concerns.

Nasdaq 100 daily chart

• _{Source: TradingView. The figures stated are as of 25 July 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}