Nasdaq Index: Arm, Nvidia Sink as Oil Rally Hits US Stock Market

Nasdaq Gets Hit From Three Sides as Iran, Oil and Chips All Turn Negative

The Nasdaq is taking hits from every direction this afternoon. Oil is running higher, the Iran deadline is spooking risk appetite, and the chip stocks are cracking. Apple, Nvidia and Arm are all lower and when those three move together like this, the index doesn’t have anywhere to hide.

Technical Outlook

Technically, the Nasdaq Composite Index (IXIC) is in a downtrend but momentum is getting close to shifting to the upside.

The long-term retracement zone at 21881.82 to 22532.88 is a huge barrier right now. Unless the war between the U.S. and Iran ended abruptly, we’re not expecting the buying to be strong enough to overtake the whole zone, but we could start to see a steady climb if new buyers can establish support on the strong side of 21881.82.

The first sign of strength late in the session will be a sustained move over 21881.82. Taking out the minor swing top at 22052.41 will confirm a shift in momentum. This could trigger an acceleration to the upside.

So while the set up is there for an upside breakout, the IXIC is also expected to face some serious headwinds at the 200-day moving average at 22363.58, a 50% level at 22532.88 and the 50-day moving average at 22556.88. Until buyers can clear this resistance cluster, we’re likely to see renewed sideways to lower pressure.

On the downside, today’s key support is the minor retracement zone at 21371.33 to 21210.60.

Iran Deadline Pushes Investors Away from Risk

The Iran deadline is the main event today. Either Trump gets what he wants on the Strait of Hormuz or the situation gets worse. There’s no middle ground and traders know it. When the outcome is that binary, you don’t sit in risk assets and wait.

Oil jumped on those fears and that creates a second problem for the Nasdaq. Higher oil feeds inflation and inflation keeps rates elevated. The Nasdaq doesn’t do well in that environment. On top of that, if oil stays here long enough to trigger demand destruction, you’ve got a growth problem on top of a rate problem.

Arm is the story in chips today. DRAM shortages are starting to slow electronics production and that hits Arm directly in the royalty stream. Fewer devices built means fewer royalties collected. The Qualcomm legal situation is still unresolved and the push into CPUs is adding uncertainty on top of that.

Nvidia dropped as traders unwound AI positions that had gotten crowded. That’s been building for a while and today gave them a reason to act. Apple moved lower too and when Apple goes, it takes a chunk of the index with it.

The money that came out of tech went straight into energy. Oil is running and energy stocks are the only place in this market with any momentum right now.

What to Watch Next

The Iran deadline is the only thing that matters for direction right now. A resolution changes everything. Without one, oil stays elevated, rates stay sticky and the chip stocks stay under pressure. Watch Arm, Nvidia and Apple at the close. The way they finish will tell you a lot about where this goes tomorrow.

More Information in our Economic Calendar.