Nasdaq: Is the Rebound Really Convincing?

Nasdaq: Is the Rebound Really Convincing?

Conflicting technical signals and concerns over AI make the coming week a decisive test for the market

The Nasdaq 100 is currently facing one of the most delicate phases of the year. After fully recovering the previous bearish daily candle in the latest session, the leading U.S. technology index showed a reaction that, at first glance, could be interpreted as a sign of renewed strength. However, when the technical, macroeconomic, and fundamental picture is considered as a whole, several elements continue to suggest caution.

The positive reaction to U.S. macroeconomic data was supported by lower-than-expected PCE inflation and a slowdown in economic growth consistent with a soft-landing scenario. At the same time, however, the market continues to face elevated bond yields, a still-cautious Federal Reserve, and a gradual deterioration in sentiment toward the artificial intelligence sector, which has been the main driver of Nasdaq performance over the past two years.

The question investors are asking today is no longer whether artificial intelligence will continue to transform the economy, but whether the valuations reached by the largest technology companies are still justified by the expected economic returns.

A Technical Recovery That Has Not Yet Changed the Picture

From a price-action perspective, the recovery of the previous daily candle represents a sign of strength. In a well-established bullish environment, this type of configuration is often interpreted as a bear trap, capable of triggering fresh short covering and supporting further gains.

The current context, however, appears different.

The index is coming off several months of strong appreciation, with historically high valuations, participation increasingly concentrated in a limited number of stocks, and momentum beginning to show signs of slowing. In this environment, the recovery may simply represent a technical rebound within a broader distribution phase.

RSI at 30: Opportunity or Confirmation of Weakness?

One of the most interesting developments in the latest session concerns the daily RSI, which reached the 30 area.

Traditionally, this level is associated with an oversold condition and therefore with a potential buying opportunity. However, experience shows that in strongly directional markets, simply reaching 30 does not, by itself, constitute a reliable reversal signal.

During the Nasdaq's major corrections in recent years, the RSI remained in oversold territory for several consecutive sessions, accompanying further downside acceleration before a meaningful low was formed.

For the signal to acquire genuine bullish significance, it would be preferable to observe a combination of factors:

• a positive divergence between price and RSI;

• a gradual exhaustion of selling volumes;

• a clear price-action reversal pattern;

• a sustained return of the oscillator above the 40-45 area.

In the absence of these elements, a test of RSI 30 may represent confirmation of the strength of the bearish move rather than a true catalyst for a new upward phase.

The AI Theme No Longer Supports the Market as Before

The main area of concern, however, remains the artificial intelligence sector.

Over the past two years, the Nasdaq rally has been driven almost entirely by a small group of large-cap companies at the center of the AI revolution. Today, the market is gradually changing perspective.

Attention is no longer focused solely on the sector's growth, but on the ability of companies to convert massive investments into tangible economic returns, sustainable margins, and cash-flow generation.

This phase of greater selectivity could lead to a reassessment of valuations even if corporate results remain broadly positive.

Should upcoming earnings reports point to a slowdown in the returns generated by AI investments or to more cautious guidance, the market could accelerate its rotation toward more defensive sectors.

The Macro Picture Remains Ambiguous

Macroeconomic data, although initially welcomed by the market, also deserve a more nuanced interpretation.

Slower GDP growth and easing inflation are positive developments, but the labor market continues to show considerable resilience.

This keeps the Federal Reserve in a cautious position and reduces the likelihood of a rapid rate-cutting cycle.

In other words, the emerging scenario is one of weaker growth combined with interest rates that remain relatively high: a combination that has historically tended to penalize assets with stretched valuations, such as the technology sector.

Technical Analysis

The medium-term technical picture continues to show conflicting signals.

The recovery in the latest session has not yet altered the underlying structure, which remains vulnerable until the market proves capable of building a sequence of higher highs and higher lows.

From an operational perspective, the area between 28,000 and 28,300 points represents the first genuine psychological and technical resistance zone.

A confirmed breakout could open the way toward 29,250-29,300 points, invalidating much of the short-term corrective scenario.

On the downside, a break below the 27,400-27,300 area would significantly increase the probability of a new selling phase, with targets around 26,000 and subsequently 25,500 points, where important medium-term technical levels are located.

Outlook for the Coming Week

Based on the information currently available, the bearish scenario appears slightly more likely.

Main Scenario – Bearish (50%)

The combination of elevated valuations, slowing momentum, uncertainty over the profitability of artificial intelligence investments, and still-restrictive monetary policy could support a renewed corrective phase.

In this environment, the Nasdaq could return to test support between 27,000 and 27,500 points, accompanied by higher volatility and a stronger rotation toward defensive sectors.

Alternative Scenario – Sideways (30%)

The market could enter a consolidation phase between 28,400 and 29,000 points, while waiting for new macroeconomic or corporate catalysts.

This scenario would allow technical indicators to absorb part of the accumulated excess without compromising the longer-term trend.

Bullish Scenario (20%)

A more constructive outcome would require a combination of favorable factors: lower bond yields, stronger-than-expected earnings, convincing guidance from the AI sector, and a clear improvement in market breadth.

Only in this case would a sustained move above 29,000 points open the way toward new relative highs.

Bottom Line

The recovery in the latest session is a technical signal that should not be underestimated, but it does not yet appear sufficient to alter a broader picture that continues to show growing signs of fragility.

An RSI reading in oversold territory does not, by itself, guarantee a trend reversal. On the contrary, in the presence of a weak technical backdrop and a gradual reduction in expectations surrounding artificial intelligence, it may simply represent an intermediate stage within a broader correction.

The coming sessions will be decisive in determining whether the Nasdaq can transform the recent recovery into a new upward leg or whether the move will ultimately be remembered as a simple technical rebound within a distribution phase.

Disclaimer: The information contained in this article is provided solely for informational and economic-financial analysis purposes and does not constitute investment advice, a personalized recommendation, or a solicitation to invest. Investing in financial markets involves risk, including the possible partial or total loss of invested capital.