The Nasdaq 100 is doing that thing where it looks like it’s winning, but the scoreboard’s starting to flicker. After taking a beating last Friday, the tech-heavy index has been clawing its way back—and it actually broke through the 30,000 barrier. Sounds great, right? Wrong. According to Bank of America’s technical strategists, that might be the market equivalent of running too fast before you trip.
Here’s the thing: when something goes up too fast, it doesn’t mean you’ve found the holy grail. It means you’re probably stretched. The Nasdaq’s 14-week Relative Strength Index (RSI)—basically a measure of how overbought something is—hit levels that made BofA’s team raise their eyebrows. Then it turned down and formed what they’re calling a “bearish engulfing week.” Translation: the momentum’s getting weird.
The strategists are flagging 28,567 as the next level to watch. If the Nasdaq drops about 3% from where it was on Tuesday and hits that mark, it would signal a new four-week low. That’s not catastrophic, but it’s the kind of thing that makes you want to tighten your seatbelt.
Now here’s where it gets spicy: chip stocks have been leading this whole rally. Semiconductors have been the cool kids at the party, but BofA’s saying they’re showing signs of being way overbought. They’re specifically calling out the VanEck Semiconductor ETF as a cautionary tale. When the relative strength index on that thing weakens below key levels—which it’s doing—history suggests the chip sector could be headed for some serious turbulence and a deeper correction.
What does this mean for regular investors? Bank of America’s basically saying it’s time to play defense. The risk-reward balance that looked so attractive a few weeks ago is starting to look less appealing. It’s not a “sell everything” moment, but it’s definitely a “maybe don’t add more chips to your portfolio right now” moment.
The irony is that the market’s been riding this wave of optimism about AI and tech productivity gains. Those stories aren’t wrong—they’re just maybe a little too priced in at the moment. The Nasdaq breaking 30,000 felt like a victory, but sometimes the market’s way of celebrating is by setting up for a correction.
So what should you do? If you’re holding tech stocks, this is probably a good time to think about your positions. Not panic-sell, but maybe trim some of the winners and lock in gains. If you’ve been thinking about buying the dip, you might want to wait a bit longer—there could be a better dip coming.
The market’s not broken. It’s just reminding us that nothing goes up in a straight line forever. Even the Nasdaq.
