Nasdaq 100: Global Chip Selloff Threatens 50-Day MA Support

Chip Selloff Tests Futures After Dow Tops 53,000

S&P 500 futures are trading lower early Tuesday. Dow futures ticked higher after Monday’s record close above 53,000, but Nasdaq-100 futures dropped after semiconductor stocks sold off across every major market overnight. The chip names that carried Monday’s session are getting sold before the U.S. cash open.

Samsung’s Record Profit Didn’t Save the Chip Trade

The selling ran through every major chip-producing market before the U.S. open. Samsung fell 9% on record profit. SK Hynix lost more than 10% and anchored the Kospi selloff. Tokyo Electron, SoftBank, and Taiwan Semiconductor all finished lower. ASML, Infineon, and STMicroelectronics gave back ground in Europe. It did not matter which exchange or which name. The exits were uniform. When stocks sell on good numbers across that many time zones, the positioning was too heavy going in and the money is coming out regardless of the headline underneath.

Nasdaq-100 futures absorbed the hit overnight and the question heading into the cash session is whether U.S. buyers step in or let the selling extend.

Monday’s Strength Is Already Getting Tested

The S&P 500 and Nasdaq Composite both finished higher Monday with technology running the session. The rally was broad enough to push through resistance that had been capping the index for weeks. The overnight reversal is challenging that move before traders get to their desks Tuesday morning.

Not every name joined Monday’s advance. Microsoft slipped after announcing plans to cut roughly 4,800 jobs. SpaceX eased ahead of its addition to the Nasdaq-100. Western Digital ran 7% on Monday, leading the semiconductor rally. Advanced Micro Devices (AMD) added 6.6% on a strong session for the chip sector. Dell Technologies gained more than 4% after President Trump encouraged consumers to buy Dell computers at a White House event.

Stocks in the News

Walmart traded lower in extended hours after President Trump said the retailer would cut prices on selected products tied to America’s 250th anniversary.

Vertex Pharmaceuticals dropped after announcing a roughly $10 billion cash acquisition of Crinetics Pharmaceuticals. Crinetics jumped in after-hours trading on the acquisition premium.

Daily September E-mini S&P 500 Index Futures Technical Analysis

September E-mini S&P 500 Index futures are edging lower early Tuesday after touching its highest level since June 17 earlier in the session.

The current upside bias is being supported by a short-term retracement zone at 7540.50 to 7493.00 and the 50-day moving average at 7485.75. Today will be an important day because if the buying continues to strengthen over the support levels, momentum will keep building, putting the benchmark index in a position to challenge the secondary lower top at 7648.75 and the all-time high at 7693.75.

The 50% level at 7493.00 and the 50-day moving average at 7485.75 are forming a support cluster. Not only does this make it an important floor, but also the trigger point for an acceleration to the downside with new targets at 7357.25 and 7292.25 hitting the radar.

Continue to look for an upside bias as long as the 50-day MA holds as support. With the upside bias in place, “buy the dip” traders could return on a pullback to 7540.50 to 7493.00. If they don’t then start looking to the downside because a new lower top could form at 7601.25 and this could become a bearish signal.

Daily September E-mini Nasdaq-100 Index Futures Technical Analysis

September E-mini Nasdaq-100 Index futures are trading lower during the pre-market session on Tuesday. The early downside momentum has put the market on the weak side of the short-term retracement zone at 29806.00 to 30111.50. Another lower top has formed at 30599.75, indicating the growing presence of sellers.

The overnight price action has put the index in a position to cross to the weak side of the 50-day moving average at 29590.29. If sellers sustain the move then look for the selling to possibly extend into the last main bottom at 29160.50. If this fails then look for a test of the next main bottom at 28512.00. This could be the trigger point that launches an acceleration into the long-term retracement zone at 27142.25 to 26208.25 and the 200-day moving average at 26708.22.

Trader reaction to the 50-day moving average at 29590.29 will set the tone today.

What to Watch

The overnight selloff handed Tuesday’s cash session a clean test. If U.S. semiconductor names hold Monday’s levels and dip buyers show up, the record highs on the Dow and S&P 500 stay intact. If the selling extends stateside and the names that ran Monday give it back, the Nasdaq-100 has the most room to fall. The trade balance report drops Tuesday and it is the primary economic release on the calendar heading into the session.

S&P 500 futures are holding a support cluster around the 50-day moving average. The Nasdaq-100 is already trading on the weak side of its retracement zone, and the 50-day moving average at 29590.29 is where the session gets decided.

More Information in our Economic Calendar.