Nasdaq: A Decisive Week for the Trend

Nasdaq: A Decisive Week for the Trend

Technical and fundamental analysis of the Nasdaq, with a focus on AI, the Federal Reserve, Treasury yields, macroeconomic data, and the weekly market outlook

The Nasdaq 100 begins the first week of August with renewed confidence, supported by easing geopolitical tensions in the Middle East and a broader return of risk appetite across global financial markets. Following a cautious but orderly Asian session and a positive European open, investors have once again shifted their focus toward the technology sector, taking advantage of lower oil prices and declining U.S. Treasury yields.

However, the recovery witnessed over the past few hours does not automatically alter the medium-term technical outlook. The Nasdaq remains in an extremely delicate phase, where macroeconomic conditions, monetary policy, corporate earnings, and the outlook for artificial intelligence continue to interact within a fragile equilibrium.

The key question facing investors today is not whether the recent rebound can continue over the very short term, but whether it marks the beginning of a new bullish phase or merely represents a pause within a broader corrective move.

Improved Sentiment Does Not Yet Change the Market Structure

Today's session has seen a significant improvement in market sentiment, largely driven by a reduction in the geopolitical risk premium.

The easing of tensions between the United States and Iran has pushed Brent crude lower, helping reduce energy inflation expectations while allowing U.S. Treasury yields to retreat modestly from last week's highs.

For a growth-oriented index such as the Nasdaq, this combination is generally supportive.

Lower bond yields increase the present value of future earnings generated by growth companies, while cheaper oil reduces the risk of renewed inflationary pressures and further tightening by the Federal Reserve.

Nevertheless, improved sentiment does not necessarily imply that the technical structure of the market has changed.

The rebound seen over the past few sessions still appears to be driven primarily by external catalysts rather than by a genuine rebuilding of the market's internal strength.

Technical Analysis: The Rebound Still Requires Confirmation

From a technical perspective, the Nasdaq continues to display mixed signals.

The index has recovered a substantial portion of the selling pressure recorded during previous sessions, but it has yet to establish a sequence of higher highs and higher lows—the essential condition for confirming a renewed bullish trend.

Particular attention should be paid to the daily Relative Strength Index (RSI).

The oscillator recently reached the 30 level, traditionally associated with oversold conditions.

Historically, however, the Nasdaq has repeatedly demonstrated that during deeper market corrections an RSI around 30 does not necessarily mark a lasting bottom.

In markets dominated by strong bearish momentum, the oscillator can remain in oversold territory for several consecutive sessions before a meaningful low is established.

To validate the current rebound as the beginning of a new bullish phase, several additional technical confirmations would be required:

• a sustained recovery of the RSI above the 40–45 range;

• the formation of higher highs and higher lows;

• broader participation across the entire market;

• renewed leadership from the semiconductor sector.

Without these elements, the current recovery could simply represent a classic technical pullback within a broader distribution phase.

Artificial Intelligence Enters a New Stage of the Cycle

Artificial intelligence remains the market's primary structural theme.

Over the past two years, the Nasdaq rally has been driven almost entirely by the major companies leading the AI revolution.

Today, however, investors are gradually changing their perspective.

The market is no longer buying every AI-related stock indiscriminately.

Instead, investors are asking a much more practical question:

Are the enormous investments in artificial intelligence actually generating sustainable earnings, healthy profit margins, and meaningful cash flows?

This shift in focus is arguably the most important change in the current market cycle.

Recent earnings reports have highlighted an increasingly heterogeneous picture.

While some Big Tech companies have continued to deliver robust growth, others have issued more cautious guidance, increasing investor selectivity.

Meanwhile, the semiconductor sector remains the leading indicator of sentiment toward the AI investment cycle.

A renewed leadership from chip manufacturers would likely represent one of the earliest signals of renewed strength for the Nasdaq.

The Macroeconomic Environment Remains Supportive—but Not Decisive

From a macroeconomic perspective, conditions appear more balanced than they were only a few weeks ago.

Inflation continues to show signs of gradual moderation, while the U.S. economy remains resilient without displaying the typical characteristics of an impending recession.

At the same time, the labor market continues to demonstrate considerable strength, limiting the Federal Reserve's ability to begin an aggressive rate-cutting cycle.

For equity markets, this represents a less negative backdrop than in previous months, but not yet one that fully justifies a renewed expansion in valuation multiples.

This Week's Key Catalysts

The Nasdaq's direction will likely depend on four primary drivers:

• earnings results from companies with the greatest exposure to artificial intelligence;

• performance of the semiconductor sector;

• movements in U.S. Treasury yields;

• macroeconomic data relating to the labor market and overall economic activity.

In particular, corporate guidance regarding the profitability of AI investments may prove even more influential than traditional macroeconomic releases.

Weekly Outlook

Based on currently available information, a cautious stance remains appropriate.

Primary Scenario – Controlled Correction (45%)

This remains the most probable outcome.

The recent rebound could evolve into nothing more than a technical rally before another period of weakness.

Elevated valuations, ongoing pressure on AI-related stocks, and limited market participation continue to represent significant sources of vulnerability.

Sideways Scenario (35%)

The Nasdaq could enter a broad consolidation range, allowing technical indicators to work off the excesses accumulated during recent weeks.

Such price action would represent a natural development following the heightened volatility experienced around the end of July.

Bullish Scenario (20%)

A more constructive outcome would require several favorable conditions:

• further declines in Treasury yields;

• renewed leadership from semiconductor stocks;

• an improvement in overall market breadth;

• convincing evidence that investments in artificial intelligence are translating into sustainable profitability.

Only under these conditions would the Nasdaq be able to resume its medium-term bullish trend with greater confidence.

Bottom Line

The improvement in sentiment observed between the Asian session and the European opening is undoubtedly positive for the technology sector, but it is not yet sufficient to eliminate the risks that have emerged over recent weeks.

The market appears to be entering a pivotal stage.

Investor attention is gradually shifting away from expectations surrounding the growth of artificial intelligence toward the ability of companies to demonstrate that these investments can generate sustainable profitability.

From a technical standpoint, the recent rebound still requires confirmation. Until stronger evidence emerges through improved relative strength, broader market participation, and renewed leadership from semiconductor stocks, maintaining a cautious approach remains the most prudent strategy.

The week that has just begun could therefore represent a decisive turning point for the Nasdaq 100—not simply in terms of short-term price direction, but in determining whether the long-term bullish cycle that has driven the technology sector over recent years still rests on sufficiently solid foundations.

Disclaimer: The information contained in this article is provided solely for informational and educational purposes and does not constitute investment advice, a personalized recommendation, or a solicitation to buy or sell financial instruments. Investing in financial markets involves significant risks, including the potential loss of part or all of the invested capital.