Nasdaq 100 futures are down 200 points overnight following Amazon’s disastrous Q2 earnings release. Could this be the start of a deeper correction for tech?
Nasdaq 100 futures are trading at 14,844, down 193.25, (-1.29%).
Fresh from last week’s all-time high, the Nasdaq was on course for its best weekly close ever. However, this morning, that feat look some way off as the index is overwhelmed by selling.
The US markets have held up particularly well considering the fate of Asian stock indices, which are suffering their worst monthly performance since March 2020.
Although after the close last night, investors were rattled after the world’s fourth-largest company showed signs of slowing down.
Amazon’s second-quarter earnings left the market disappointed after the retailer fell short of Wall Street’s consensus revenue expectations. Furthermore, the tech giant expects headwinds to persist for the foreseeable future. Which sent the stock 7.5% lower after the close.
The pessimistic forward guidance echoes Facebook, which also warned investors of headwinds in the second half of the year.
The daily chart shows the Nasdaq 100 has reversed from the resistance of a long term uptrend at 15,100. In yesterday’s trading session, the index looked set to retest the rising trend line. However, the momentum has now turned lower.
Should the selling pressure continue, the first downside target is the 19th of July low at 14,445. The 50-day moving average follows this at 14,320.
A deeper decline would bring the 100 DMA at 13,875 and trend line support at 13,750 to play.
However, should the Nasdaq climb above the trend line resistance, now at 15170, the outlook turns sharply bullish once again.
For now, the immediate danger is on the downside, and this view remains valid below 15,170.