Nasdaq 100: Tech Stocks Need Base Formation to Sustain Rally, Not V-Recovery

• The index dropped rapidly from its January 2026 peak of 26,349 (just shy of the record 26,670), falling through its 50-day moving average and nearly touching its 200-day MA at 24,379.78 within a month
• Investor mentality shifted from 'loading the boat' speculation to a 'show me the money' approach, demanding concrete profit evidence rather than growth promises, particularly affecting overpriced tech and software stocks
• Analysts recommend building a sideways consolidation base at current levels rather than rushing toward new highs, as attempting to recover from lower-lows without establishing support invites short-seller pressure

Market Summary: Nasdaq 100 Technical Analysis

Key Technical Levels

The Nasdaq-100 is rallying after a sharp decline but requires base formation at the 200-day moving average (24,379.78) before challenging the record high of 26,670. The index topped at 26,349 on Fed announcement day before slicing through its 50-day MA (25,563.75) and nearly hitting its 200-day MA within one month.

Market Dynamics Shift

Investor sentiment has fundamentally changed from aggressive "loading the boat" momentum buying to a "show me the money" approach demanding tangible profits. This shift occurred in late January following earnings season and the Fed announcement, coinciding with selloffs in other risk assets including software stocks, gold, silver, and bitcoin.

Fed and Rate Expectations

Markets are pricing in no rate cut for March with a 50% probability of a June cut. Fed minutes are due at 19:00 GMT, though analysts expect no surprises given recent statements from Chairman Powell and recent labor market/inflation data.

Technical Outlook

While the two-day rally is impressive, analyst James Hyerczyk emphasizes the need for consolidation rather than a V-shaped recovery. The recommended strategy is building a support base through sideways movement and forming an "elongated rectangular box" pattern. The 200-day MA has historically represented value throughout this 44-year bull market.

Market Implications

Establishing solid support at current levels is critical for any sustainable move to new highs. Without proper base formation, the index risks continued vulnerability to short-sellers who can profit from failed rally attempts.