US 100 - Bubble Fears Are Back Driving SentimentUS Tech 100 IndexPEPPERSTONE:NAS100PepperstoneA sell off in previously high-flying chip stocks was a key reason why the US 100 index dropped 3.9% last week from opening levels at 29800 on Monday down to a close of 28566 on Friday. Sentiment has turned down at the start of July as fears of an AI bubble resurface once more, repeating a pattern of risk on then off again that has been witnessed by traders in this very popular area of financial markets since the middle of last year. Looking forward, the huge capital expenditure being committed to artificial intelligence by several of the world biggest companies and whether it’s generating commensurate revenue returns is once again being questioned just days before Tesla and Alphabet report their latest earnings on Wednesday (after close), and 10 days before Microsoft, Meta and Amazon provide their next updates. These stocks carry a large index weighting meaning their actual results, future revenue growth predictions and capital expenditure forecasts could contribute to outsized directional moves in the US 100 across this crucial two week period into the end of July. The technical outlook is potentially flagging an interesting dynamic that may also be worth monitoring. Technical Update: Downside Focus Potentially Shifting to Last Low at 28206 Since posting the all‑time high at 30776 on June 3rd, the US 100 index has traced out a period of choppy sideways activity, as a decision‑making process appears to have formed between buyers and sellers. The lower limits of this sideways pattern could be marked by 28206, the June 9th low, which has held throughout the recent consolidation pattern. However, as the chart above shows, price weakness is currently emerging after a failure to breach previous session highs on a closing basis. This price action has created a series of lower highs, which could leave traders wondering if this type of price activity is an indication of negative sentiment emerging. Within this backdrop, being aware of potential key support and resistance levels may prove useful to establish where the next directional risks could lie this week as the key risk events play out. Potential Support Levels: In technical analysis, if there is a suspicion of potentially negative weak tests of previous price highs, it is often the last correction low of the previous uptrend that becomes the key support focus for traders, as closing breaks below this level can lead to further price weakness. In the case of the US 100 index, this dynamic could bring 28206, the June 9th downside extreme into play as this level may represent the last correction low and therefore may be the first key support focus for the coming week. While not a guarantee of continued price declines, closing breaks below 28206 could open the way for further downside momentum to emerge. Such moves, if seen, could suggest scope toward 27696, which is the 38.2% retracement, possibly then the deeper 50% level at 26753. Potential Resistance Levels: Of course, the support at the 28206 low is currently still intact, and while this remains the case, it’s possible the choppy sideways range can extend further. If this is the case, closing breaks back above 29239, which is equal to the 38.2% Fibonacci retracement of the latest decline, may be required to open potential for a push to higher levels. Closing breaks above 29239 could be viewed as an indication of upside re‑emerging. If this is the case, risks may shift toward further price strength to test the next resistance at 29434, the current level of the Bollinger mid‑average, and if this is also breached, on toward 29791, the higher 61.8% retracement level. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.