AI Stocks Dive, What's Next for Markets?

Summary

The market is seeing a correction in AI and semiconductor stocks, with the S&P 500 closing flat last week while the NASDAQ took a bigger hit. Geopolitical news regarding Iran was followed by an de-escalation, suggesting decisions may be influenced by market activity. With a holiday-shortened week and institutional investors likely taking time off, retail investors may have more influence, potentially leading to neutral to higher market movement. Technically, the S&P 500 is holding major support, but a break below could signal a significant corrective move. The NASDAQ has formed a double bottom, and its 50-day moving average is a key indicator; a sustained break below it historically precedes larger drops. The US dollar is pulling back from resistance, while the 10-year yield has fallen. Crude oil is trading sideways as markets seem to dismiss immediate escalation risks in the Middle East, with slight bullishness expected due to support levels and strategic reserve needs. SpaceX's addition to the NASDAQ 100 saw a less pronounced stock jump than typical, indicating a market shift. Microsoft is showing a technical bounce, with a potential resistance around $400, while Oracle is experiencing an oversold bounce after a significant drop. Many AI-related stocks, including Nvidia and Broadcom, have broken key support levels and show bearish formations. Micron's gains from earnings have been given back, suggesting peak demand for memory is being recognized by smart money. Tesla is near a key support trendline at $370, a break of which would be problematic. Gold is pulling back, with support between $3,900 to $4,000, while silver is facing resistance at $64 and a bearish flag formation could indicate a move towards $54 or $50. Natural Gas is showing a cup and handle pattern but a breakout is awaited. Bitcoin is experiencing a small bounce, holding technical support around $58, but a bearish flag is forming.