The Nasdaq Composite is down to 2.0% but more than that, the chart is painting an ugly reversal after what started out as a spike.
That's a bearish outside day and it's a negative signal. it also comes between the 50-61.8% retracement level of the July high to the Aug low. That's a typical spot for a rebound to fail and points lower.
What's particularly troublesome is that it comes after a blockbuster report from Nvidia, which has undoutedly been the leader of the 2023 rally in the Nasdaq. The foundation of it is generative AI and Nvidia is the king of that space.
But despite a huge quarter, shares of Nvidia have pared a 15% pre-market gain down to just 0.4%. The sell-the-fact reaction to Nvidia earnings, which were extremely hyped, is something I thought might happen.
The question now is: If AI and a blockbuster earnings report can't lift this market, what can? On top of that, there are mounting signs of US consumer weakness with Target, Foot Locker and Dollar Tree all warning on a flagging consumer. Add in China economic weakness and it's starting to look like a table with no legs.
I'm not even sure dovish comments from Powell tomorrow can help, but hawkish comments will certainly hurt.
