Katie Stockton: Bracing for volatility after Nasdaq broke below recent support
Speakers
Katie Stockton
— Founder, Fairlead Strategies
Summary
Katie Stockton warns of near-term volatility after the Nasdaq 100 broke below its 50-day moving average, with the S&P 500 at risk of breaking key support at 7340. She sees rotation into software and safe defensive sectors such as health care, REITs, and utilities, while the AI trade and semiconductors remain under pressure.
- Nasdaq 100 lost 50-day MA support; next support is 8-9% lower, volatility may spike.
- S&P 500's critical support is at 7340; a breakdown would drag everything and call for hedging high-beta.
- AI/semiconductor sector led the downside; an AI ETF is down ~19% and near support, potentially stabilizing.
- Software sector continues to benefit from rotation and is showing fresh breakouts.
- Defensive sectors (health care, utilities, REITs) have strong technical setups and offer safety.
- Financials saw muted earnings reactions with no clear directional signal.
Ideas
Nasdaq 100 breakdown risks further downside
The Nasdaq 100 index has broken short-term support defined by the 50-day moving average, which is rolling over. The next support is well below, 8-9% lower. The index has been coiled in a consolidation phase, and a downside resolution can spark a big pickup in volatility. This increases near-term downside risk.
Watch S&P 500 for breakdown below 7340
The S&P 500 is in a coiled consolidation phase similar to the Nasdaq 100. If it breaks below equivalent support at 7340, defined by the 50-day moving average and the cloud model, that would likely drag everything down and signal the need to hedge, especially high-beta positions. The level is a critical watch point.
Software sector rotating higher with breakouts
Rotation out of semiconductors and into software has been underway and continues. There are still breakouts occurring in the software sector, indicating relative strength and ongoing upside momentum.
Defensive sectors have strong technical setups
Defensive sectors such as health care, REITs, and utilities offer safety and exhibit really good technical setups. Even if the S&P 500 breaks down, these areas can provide a haven from a bottom-up perspective.
