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The Nasdaq index fell on Friday after weak quarterly reports from Intel and Snap pulled the tech sector down. There is worrying news hanging over Big Tech. Will the US100 fall continue and what should traders watch out for the week?
US100
The first factor unfavourable to investor sentiment was Intel’s weak report, after which shares plummeted by almost 12%. The company failed to meet sales forecasts, citing a chip shortage problem.
We should immediately take into account the fact that the technology sector reports have only just begun. Which means that global issues such as chip shortages are likely to have had an impact on the financial results of other companies in the industry as well. Their reports are yet to be seen by the market.
The second worrying sign came from Snap, owner of the social network Snapchat. The change in privacy terms that Apple introduced on iOS devices has affected the company’s ability to target ads. Against this backdrop, Snap’s shares plunged almost 27%.
Apple’s privacy story casts a shadow over Facebook and Twitter, which generate revenue from targeted advertising. This impact is likely to find expression in the financials of the companies, whose quarterly reports are due on 25 and 26 October. Their shares have already fallen behind Snap on expectations.
Further growth of the Nasdaq index is therefore in question. The situation on the chart looks more encouraging. But quarterly reports from Big Tech companies could break the technical picture. And until they arrive, investors are likely to be cautious.
Nevertheless, the picture so far on the US100 daily timeframe is as follows. After the double-bottom pattern (range 14500-14900), which reversed the correction of the index in September-October, something looks like a bullish flag. Though, of course, it is a bit crooked, with not a very nice handle, but, let’s take it under consideration. Now there is a pattern body in the range of 15300-15500, which means that there is a potential for recovery of the index to the all-time high.
Whether or not these technical prerequisites work out, we will see on the reaction to the Facebook and Twitter reports on October 25 and 26.
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