📉 Nasdaq Drops as Nvidia Crashes – What’s Next for the Market?
The financial markets were shaken this week by the news of a Chinese AI startup launching a low-cost artificial intelligence model, causing Nvidia’s stock to drop sharply. The tech giant, known for its dominance in AI and semiconductors, lost over $600 billion in market value in record time.
But what does this mean for traders and investors in the coming weeks and months? In this article, we’ll analyze Nvidia’s stock, the Nasdaq 100, and the tech sector’s future outlook.
🔍 What Happened to Nvidia?
📉 Nvidia’s Drop at a Glance:
- Initial Gap Down: Nvidia opened 12% lower on Monday.
- Total Drop: From its all-time high, Nvidia lost 25% of its value.
- Key Resistance & Fibonacci Levels: Current retracement is at the 38% Fibonacci level, a crucial area for potential recovery or further decline.
The massive sell-off was triggered by news that DeepSeek, a Chinese AI startup, had developed a model that could rival Nvidia’s AI chips at a much lower cost. This sparked fears of a sector rotation, where investors move capital out of tech stocks and into other industries.
📊 Nasdaq 100: Technical Analysis & Market Outlook
Since Nvidia holds a large weight in the Nasdaq 100, its decline dragged the entire tech sector down. Here’s what we’re seeing:
1. Long-Term Trend on the Nasdaq (Monthly Chart)
📌 Nasdaq remains at all-time highs, far extended from its 20-period moving average—a sign of overextension in the market.
📌 Previous bear markets in the Nasdaq have resulted in 40% drops, which could be a risk if a sector rotation truly begins.
2. Short-Term Rebound? (Daily Chart)
📌 Despite the drop, Nvidia and the Nasdaq rebounded over 10%, typical of a dead cat bounce (temporary rally after a sharp decline).
📌 The question remains: Is this just a short-term dip or the start of a larger tech sector sell-off?
3. Trading Opportunities in the Nasdaq Drop
🟢 For Long Trades: Wait for confirmation of a 38% Fibonacci retracement and a breakout above resistance.
🔴 For Short Trades: A failure to reclaim key levels could mean further downside toward the 50% or 61.8% Fibonacci retracement levels.
⚠️ The Bigger Picture: AI Disruption & Sector Rotation
Two major theories are emerging about this Nasdaq crash:
1️⃣ It’s just a short-term correction: Some believe this is a temporary pullback, and Nvidia will recover soon, returning to all-time highs.
2️⃣ A real shift in market trends: Others argue that the rise of new AI competitors like DeepSeek signals a shift away from big tech dominance, leading to capital rotating into new industries or markets.
If the second scenario plays out, we could see big money moving out of tech stocks and into emerging AI players, energy, or industrial sectors.
💡 Key Takeaways for Traders & Investors
✅ Tech stocks remain dominant, but the AI sector is evolving fast—watch for new trends.
✅ Monitor Fibonacci retracement levels—if Nvidia and the Nasdaq break key supports, expect further downside.
✅ Watch for institutional moves—if big funds start selling major tech stocks, a deeper correction could be ahead.
✅ Opportunities in volatility—Nasdaq’s recent moves have created strong day trading opportunities.
🎯 Final Thoughts & What’s Next
This is a critical moment for the tech sector, and traders should remain alert to market signals. The Nasdaq is still in a strong uptrend, but if new AI disruptors gain traction, we could see a shift in investor sentiment.
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