Is Market Momentum About to Waver?

BTIG warns of possible turbulence as Nasdaq rally stretches technical limits

Nasdaq 100 Rally Nears Exhaustion, Say Strategists

Market analysts at BTIG have raised a red flag over the recent momentum in the Nasdaq 100, which has now traded above its 20-day moving average for 60 straight sessions—marking the second-longest streak since 1985. Only one longer streak exists, which ended in early 1999, just before a major market correction.

According to Jonathan Krinsky, Chief Market Technician at BTIG, this extended bullish run could point to near-term turbulence, although not necessarily a major market peak.

Technical Indicators Suggest Cooling Ahead

Krinsky noted that the weekly Bloomberg candle sessions are currently printing a 12-count, one step away from the signal-13 level seen at the December 2024 peak, which preceded a pullback. This suggests the index may be approaching an inflection point, with exhaustion signals mounting.

The Nasdaq’s performance has been impressive, but the technical outlook indicates overstretched conditions—a classic setup for a short-term correction.

Market Sentiment May Be Overheating

Further warning signs come from the BUZZ Index (NYSE:BUZZ), which tracks social media sentiment and speculative activity. Its 15-week rate-of-change has surged to 62%, exceeding highs last seen during the zero interest rate environment of 2020–2021.

This surge reflects a growing level of froth and risk appetite, raising concerns about sustainability.

“Seasonals aren’t bearish yet, but the best stretch of the summer is now behind us,” Krinsky stated in a note on Sunday.

Q2 Earnings Could Steer the Market

This week’s trading will be heavily influenced by Q2 earnings reports, with major players such as Alphabet (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), and Intel (NASDAQ:INTC) all reporting results.

These updates will provide insights into key market sectors:

• Alphabet: Focus on digital advertising, AI, and cloud growth
• Tesla: Margins, delivery volumes, and its full-year outlook
• Intel: Progress on AI integration and its data centre recovery

Strong results could offer temporary support, but underlying risks remain.

Inflation, Tariffs, and Valuations Still a Concern

Analysts at Vital Knowledge cautioned investors not to be complacent.

“We’re still wary of chasing the S&P 500 at these levels,” said strategist Adam Crisafulli, citing undervalued risks around inflation, tariffs, and elevated stock valuations.

While earnings so far have been solid, Crisafulli warned that markets may be underestimating macroeconomic challenges, including potential tariff shocks and sticky inflation.

What This Means for Future Trading

If current technical and sentiment trends persist, we could see a shift towards more defensive and rotational trading strategies. Traders and investors may:

• Rebalance away from overextended tech and growth stocks
• Seek value in under-owned sectors such as energy, financials, or industrials
• Hedge portfolios against potential short-term volatility

The next phase of the market may involve greater reliance on fundamentals, especially earnings strength, rather than momentum-driven rallies.

Sources: (Investing.com, Reuters.com)