Nasdaq 100 and S&P500: Tech Stocks Sink as Kospi Crash Shakes US Indices

Tech Selloff Went Global Overnight

Monday’s mega-cap selling crossed the Pacific and hit Asia hard before rolling into Europe and U.S. pre-market futures. South Korea’s Kospi reversed from early gains and crashed nearly 10%. European chip stocks led their markets lower. Nasdaq-100 futures are leading the pre-market decline with the S&P 500 and Dow following.

The selling jumped continents in less than 12 hours. When that happens the market is not reacting to one headline. It is repricing the entire trade.

Daily September E-mini S&P 500 Index Futures

September E-mini S&P 500 Index futures are sharply lower in overnight trading. The market crossed to the weakside of the short-term retracement zone at 7493.00 to 7540.50 earlier in the session, triggering the sell-off. This zone is new resistance.

The next key level to watch is the 50-day moving average at 7420.50. We could see a technical bounce on the first test of this indicator, but a failure could fuel a fresh round of selling pressure with the next target, the main swing bottom at 7292.25.

Taking out 7292.25 will reaffirm the downtrend. This could bring in even more sellers. It will also put on the radar the target cluster formed by the 200-day moving average at 7049.44 to 7047.75.

On the upside, overtaking the short-term Fibonacci level at 7540.50 will put the index in a strong position once again.

Trader reaction to the 50-day MA should set the tone on Tuesday.

Daily September E-mini Nasdaq-100 Index Futures

September E-mini Nasdaq-100 Index futures are under pressure in Tuesday’s pre-market session. Crossing to the weakside of a Fibonacci level at 30111.50 shifted momentum to the downside. A move through the 50% level at 29806.00 will make 30975.50 a secondary lower top and could trigger an acceleration to the downside with the 50-day moving average at 29042.18 the next target.

Watch for a technical bounce on the first test of the 50-day MA. If it fails, however, the selling pressure could extend into the main bottom at 28512.00. A trade through this level will reaffirm the downtrend. This is another potential trigger point for an acceleration into the retracement zone at 27142.25 to 26208.25. Inside this zone is the 200-day moving average at 26493.06. This area is a value zone, which means it’s likely to attract buyers when tested.

On the upside, overtaking 30111.50 could shift momentum back to the upside.

Daily September E-mini Dow Jones Industrial Average Futures

September E-mini Dow Jones Industrial Average futures are also weak. The short-term range is 50107 to 52734, which makes its 50% to 61.8% zone at 51421 to 51111, its first downside target area. Buyers could step in on the first test. If it fails to hold then look for the selling to extend into the 50-day moving average at 50517.00. This is the last potential support before the main swing bottom at 50107.

Overtaking 52305, will shift momentum back to the upside.

Kospi’s 10% Crash Set the Tone for Tuesday

South Korea’s Kospi opened higher Tuesday and then fell nearly 10%. The index started the session with gains before sellers overwhelmed every bid on the board. A reversal that violent in a market that sits at the center of the global chip supply chain tells you the money leaving tech is not orderly. It is forced.

European chip and tech names followed the same direction. Semiconductor stocks took the heaviest selling across the continent. The damage from Monday’s U.S. session spread into every market that trades the AI theme and none of them found a floor overnight.

Monday’s Magnificent Seven Losses Started This

Alphabet sold off hard Monday after reports that key AI researchers left for competitors. Amazon and Meta posted steep losses alongside it. The Nasdaq and S&P 500 finished lower while the Dow held gains on the back of Caterpillar and other industrial names.

Monday’s rotation from mega-cap growth into traditional sectors was a U.S. story. By Tuesday morning it was a global one. The AI spending concerns that hit Alphabet, Amazon, and Meta carried straight into the Kospi and European chip names without losing any momentum overnight.

Tech Fears Overshadow Oil Drop

Crude fell after reports of further progress between the U.S. and Iran. The U.S. Treasury authorized Iranian oil sales through August, adding supply pressure on top of the 60-day framework. Lower crude helps the inflation picture ahead of this week’s data but the market is not trading off oil Tuesday morning. It is trading off the tech rout and the Kospi crash.

What to Watch

The question Tuesday is whether the tech selling stays contained or drags the broad market into a deeper correction. The Kospi crashing 10% after opening higher tells you international funds are not done reducing exposure. Carnival and Korn Ferry report earnings Tuesday and S&P Global PMI data lands as well. Neither one overrides a global tech rout but a weak PMI reading on top of it gives sellers another reason to press.

All three contracts are approaching their 50-day moving averages and that is where Tuesday gets decided. A bounce on the first test of the S&P 50-day at 7,420.50 is expected. If it fails, the main bottom at 7,292.25 becomes the target and the Nasdaq-100 and Dow face the same setup underneath. The 50-day is the line between a controlled pullback and something worse.

More Information in our Economic Calendar.