The NASDAQ 100 futures (NQ) are suffering a brutal decline along with all other US markets, closing at 16,613, down 5.28% for the session. This marks a cumulative drop of 26.67% from the February highs, officially placing the tech-heavy index in bear market territory. Lets take a closer look.
Macro & Fundamental Backdrop
The NQ rout continues to be driven by two powerful forces:
A Hawkish Federal Reserve
Markets are reeling after Fed Chair Powell’s recent comments reaffirmed the central bank’s commitment to keep rates elevated “for as long as necessary” to tame inflation. Markets had been front-running a pivot since late 2024, pricing in cuts. That narrative has now collapsed.
- 2Y yields hit multi-month highs, pressuring growth names.
- Tech, with its duration-sensitive earnings profile, is bearing the brunt.
AI Sentiment Unwinds
What started as a parabolic rally in semiconductors and AI-related names has now turned parabolic to the downside. Mega caps like Nvidia and AMD are getting repriced as earnings growth slows and valuations come back to earth.
Technical Analysis
Trend Breakdown
- The rising channel from late 2023 has been decisively broken.
- Price sliced through both channel support and the last meaningful swing low.
- There are no strong support structures nearby, creating a vacuum effect.
Momentum Breakdown
- RSI is at 20.33—deep in oversold territory.
- No bullish divergence on RSI—price and momentum are aligned lower.
Trade Opportunities
Short Continuation (Momentum Play)
- Entry: Any bounce to ~17,250–17,500
- Stop: Above 18,000
- Target: 16,000 → 15,500
- Conviction: High – trend, structure, and macro all point lower
Oversold Bounce Scalps (Countertrend)
- Entry: Reactive long near 16,500 with a strong reversal candle
- Target: 17,200 max
- Stop: Below 16,250
- Conviction: Low – momentum is strong against bulls
What to Watch
| Catalyst | Bullish Case | Bearish Case |
|---|---|---|
| Fed Minutes this week | Hints of flexibility or pause | Confirms higher for longer stance |
| Inflation data (CPI next week) | Decelerating CPI would spark bounce | Sticky inflation → yields keep rising |
| Tech Earnings (April) | Strong results from mega caps | Weak guidance could fuel new leg down |
Summary
- Trend: Broken, strong bearish momentum
- Oversold Conditions: Yes, but no reversal signal yet
- Macro Narrative: Hawkish Fed + AI overvaluation unwind
- Short Bias: Active until structure changes
Unless the macro picture shifts or bulls can mount a volume-backed reversal above 17,200, the NASDAQ remains vulnerable to a deeper correction—potentially toward the 15,500–15,000 zone, where stronger structural support lies from mid-2023.
Markets are no longer pricing in soft landings or AI dreams. They’re pricing in reality.
