🔽 US100 tests key support zone

Disappointing earnings from Alphabet are dragging tech shares lower

Wall Street indices are trading lower today with tech shares being underperformers. S&P 500 drops 0.7%, small-cap Russell 2000 is down 1.2% while Nasdaq slumps 1.5%. Dow Jones is an outperformer with a 0.2% gain at press time. Weak performance of the US tech sector can be explained with disappointing earnings from Alphabet (GOOGL.US). Company disappointed with results of its cloud segment, sending shares 9% lower today and to levels not seen since late-July 2023. Solid earnings report from Microsoft (also released yesterday after market close) lifted the company's shares by 3% but was unable to completely offset hit to the sentiment caused by Alphabet.

Taking a look at the Nasdaq-100 futures (US100) chart at D1 interval, we can see that the recent bounce on the index turned out to be short-lived and it is now once again testing a key support zone. The 14,650 pts area is marked with the lower limit of the Overbalance structure and a break below would hint, at least in theory, at a bearish trend reversal. A point to note is that the index has been trading in a descending triangle recently and a textbook range of the breakout suggests a possibility of a drop to as low as 13,350 pts should we see a move below the aforementioned 14,650 pts support.

Source: xStation5