Entering a Deep Seek for the Next Directional Move

Trading View Link: US Tech 100 – Entering a Deep Seek for the Next Directional Move for PEPPERSTONE:NAS100 by tv1lsqiw — TradingView
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Title: Entering a Deep Seek for the Next Directional Move

Just as US Tech 100 traders were starting to think about the potential for a renewed attempt at all time highs again after President Trump’s first week in office saw him apply a more measured approach to imposing tariffs on key trading partners, they were jolted back into reality yesterday with a sharp and immediate 3% drop from the open.

Buzz had been building around Chinese AI start up DeepSeek’s latest AI model, released last week, in that it was a credible alternative to the US offerings from OpenAI, for example. Over the weekend this buzz shifted to outright investor panic that DeepSeek was able to produce such a competitive AI model, given that they offer a much lower cost business proposition based on using less advanced chips.

This realisation, that DeepSeek could be a major low cost disruptor in the AI space initiated a recalibration of valuations which saw semiconductor stocks fall, led by a massive 17% drop in Nvidia stock which wiped around $600 billion from its overall value. All of which, pulled the wider US Tech 100 lower due to the large weighting held by Nvidia.

Now, looking forward, this week’s packed calendar of events could lead to increased volatility for the US Tech 100.

On Wednesday evening the Federal Reserve interest rate decision is released at 1900 GMT. No changed is expected so the emphasis is likely to shift towards the comments from Chairman Powell in the press conference which starts at 1930 GMT.

Traders will want to know whether his thoughts towards rate cuts in the first half of 2025 may have changed after the recent slowing in underlying inflation. They will also want to know how many rate cuts Fed policymakers now see across the whole of 2025.

If that wasn’t enough, later Wednesday night, Tesla, Microsoft and Meta release their earnings, with Apple’s results released after the close on Thursday. While expectations are high, traders will be keen to see whether there is any slowdown in growth relative to previous quarters. They will also want to know the details of AI related spending and revenue, with any disappointment leading to an increase in US Tech 100 volatility into the weekend.


Technical Update:

After Monday’s sharp decline, Wednesday’s FOMC meeting and Big Tech stock earnings are set to be important sentiment drivers for the US Tech 100 Index.

The question is, will these events lead to fresh buying, supporting the index after its recent falls, or will they be viewed by traders as another reason to reduce risk further, extending the downside moves?


Let’s have a look at the potential technical levels that may be worth watching over coming days.

Potential Support Levels:



Weakness such as that seen on Monday does not in itself mark the potential of a sentiment shift, as key support levels must give way to increase the possibilities of further declines.

With that in mind, Monday’s price weakness held above support at 20477, with is the low from January 13th. Having prompted the type of rebound it did yesterday, closing breaks below this level may be required if a more extended phase of weakness is to materialise.

Closes below 20477 may be an indication that the current weakness can extend to lower levels. If that were the case the next possible support may be between 20270/20309, which contains the 38.2% Fibonacci retracement of August 2024 to December 2024 strength and the November 19th session low.

If this area gives way, the next support could then be 19904, which is the November 4th 2024 low.

Potential Resistance Levels:



By running Fibonacci retracements using last week’s high at 21909 (January 22nd high) alongside Monday’s low at 20477, the 61.8% retracement stands at 21424. This may mark the first resistance that needs to be broken on a closing basis.

If there were a break above this Fibonacci level, then last week’s 21909 high may be the next important resistance level to monitor. This resistance level now marks an area where having found sellers before, it could so again, especially as it was strong enough to turn the recent advance lower in the way it did on Monday.

While breaks of previous highs may have resulted in fresh price strength previously, there is no guarantee they will do so again, and much will depend on future price trends. However, possible closes above 21909 can potentially open up a more prolonged phase of price strength to challenge, possibly even breach 22142, the December 16th all-time high.

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