Nasdaq Index: Tech Stocks Rebound Today as Oil Drops, Forecast Improves

Stocks Rebound as Oil Cracks

Stocks reversed higher late Thursday after July WTI crude oil cracked the $100 level and pulled the inflation worry off the screen. The S&P 500 is trading 0.17% higher at 17:37 GMT, the Nasdaq Composite is up 0.19%, and the Dow Jones Industrial Average is 116 points higher at 0.37%.

July WTI crude oil is at $98.35, down from $102.66 earlier and back under the $100 line. July Brent crude oil is at $104.66, lower by 0.91% after trading as high as $109.23 on the Iran headline. The 10-Year U.S. Treasury yield is up just over 2 basis points at 4.591%. The 30-year is up less than 1 basis point at 5.121%. Yields pared, oil gave back the spike, and the equity bid showed up.

Nasdaq Composite (IXIC) Technical Analysis

The main trend is up according to the daily swing chart, but momentum has turned lower. A trade through 26707.14 will signal a resumption of the uptrend. The nearest swing bottom is 20690.25 so the longer-term trend is safe at this time.

The minor range is 26707.14 to 25701.44. Its retracement zone at 26204.29 to 26322.96 is resistance and the key area we should be watching into the close.

A sustained move over 26322.96 will indicate the return of buyers and put 26707.14 and the possibility of new record highs back on the radar.

A sustained move under 26204.29 will signal the presence of sellers. If this move creates enough downside momentum, we could see a labored break into the minor bottom at 25701.44 and pair of pivots at 25599.49 and 25453.07.

In my opinion, the latter is a potential trigger point for an acceleration to the downside with 24751.48, the primary downside target.

To summarize my technical forecast, look for sellers at 26204.29 to 26322.96. They are going to try to form a secondary lower top. Once formed, the selling pressure could intensify with a potential steep break under 25453.07.

If the secondary higher top doesn’t form then the new main swing bottom will move up to 25701.44 and traders will likely be targeting a new record high through 26707.14.

WTI Cracks $100

July WTI crude oil is trading $98.35, down from $102.66 earlier in the session and back below the $100 level. July Brent crude oil is at $104.66, lower by 0.91% after spiking as high as $109.23. Reuters reported that Iran’s supreme leader issued a directive to keep enriched uranium inside the country, which further complicates the path to any resolution of the U.S.-Iran war. Traders bought the headline. Then they sold the move.

Strait of Hormuz uncertainty is still on the screen but the price is no longer reflecting the worst case. Higher oil works its way into transportation costs, production costs, and consumer prices, and the reversal back under $100 is what gave equities the cover to bounce.

Yields Pare the Advance

The 10-Year U.S. Treasury yield climbed more than 2 basis points to 4.591% and the 30-year bond yield is up less than 1 basis point at 5.121%. Yields followed oil higher early and then pared the advance when crude rolled over. The inflation worry is still in the price. It is just not as loud as it was at the morning highs. The longer July WTI crude oil stays under $100, the easier it gets for the Federal Reserve to keep cuts on the table. That is the link between the oil reversal and the bid that came into equities.

Walmart Misses on Profit Guide

Walmart held full-year guidance steady but came in below the Street on second-quarter profit and the stock got hit hard. The consumer staples sector took the worst of it. Walmart is the read on the U.S. consumer that traders cannot ignore. The reach across households means a soft guide carries weight on every other consumer name on the screen. The way I see it, the weak Q2 profit print is what mattered, not the unchanged full-year number. The index is turning higher despite the Walmart drag, not because of it.

Nvidia Slips on Competition

Nvidia moved lower even after a strong revenue forecast and a sizable share repurchase announcement. The story under the headlines is competition. The stock has been carrying the entire artificial intelligence trade for two years and traders are starting to ask whether established tech players and other semiconductor names are going to take pieces of that growth. The buyback and the forecast did not answer the question. A name that gets a big revenue print and a big buyback on the same day and still cannot find a bid is telling you something about positioning. The trade is crowded and the easy upside is harder to find.

Trump Pauses AI Order

President Donald Trump pushed back a planned signing ceremony for a new executive order covering the artificial intelligence industry. The reason given was concern that pieces of the order could get in the way of the United States holding its lead in the sector. The administration has been a friendly voice for AI development so the delay matters. Traders watching for the regulatory framework that decides where the next billion in capital flows now have to wait.

Quantum Names Take Off

A small group of quantum computing stocks ripped Thursday on reports that the administration plans to back specific companies in the sector. IBM moved sharply higher. GlobalFoundries, D-Wave Quantum, Rigetti Computing, and Infleqtion all posted significant gains. The bid in quantum on a down tape says capital is still hunting the next emerging technology theme even when the rest of the market is selling.

Jobs Tight, Factories Run Hot

Weekly jobless claims fell, which says the labor market is still tight. U.S. manufacturing activity hit a four-year high as companies pulled inventory forward to protect themselves against shortages and price increases tied to the geopolitical risk.

A resilient economy gives the Federal Reserve room to keep the focus on inflation rather than rush toward cuts. Stocks turned higher anyway. The oil reversal mattered more than the data Thursday, but the data is still there underneath and it is the reason yields are not falling further.

What to Watch Into the Close

Three live drivers are running into the close. Iran is the first because Tehran’s posture decides whether July WTI crude oil stays under $100 or spikes back through it. Yields are the second because the pause in the 10-Year U.S. Treasury yield at 4.591% is what gave equities the room to rally. Walmart and Nvidia are the third because the read on consumers and the read on the artificial intelligence trade decide whether the two largest themes carrying the index can stay in control. Those three together produce a tape that holds the rebound as long as oil stays heavy. That changes the second the oil bid comes back.

The chart says where the trade breaks. The Nasdaq Composite is testing the 26204.29 to 26322.96 retracement zone from below and that is the area buyers have to take back to keep the rally going.

A sustained move over 26322.96 puts 26707.14 and a run at new record highs back on the radar.

A break under 26204.29 puts the minor bottom at 25701.44 in play with pivots at 25599.49 and 25453.07 right behind.

The level that matters most into the close is 26322.96. That is where the reversal either confirms or fails.

More Information in our Economic Calendar.