Nasdaq Index: Forecast Turns Bearish After 50-Day MA Break as AI-Driven Tech Stress Builds

• Tech sector selloff shows massive divergence as Nasdaq fell 1.4% while Dow hit record highs, with 'old economy' stocks like Caterpillar reaching all-time highs amid rotation out of technology
• Breaking below 50-day MA and January 20 support at 22,916.83 could accelerate downside toward December low of 22,692.00 or November low of 21,898.29
• VIX rose to 20.37 intraday (highest since January 21) before closing at 18.00, up 10.16%, indicating elevated hedging activity but not full panic as markets await Thursday's Big Tech earnings

Summary: Nasdaq Turns Bearish on AI Disruption Fears

Key Technical Developments

The Nasdaq Composite broke below its 50-day moving average at 23,367.84 on February 3, 2026, triggering bearish technical signals. The index faces potential downside acceleration toward December lows at 22,692.00 or November lows at 22,898.29 if support at 22,959.14 and 22,916.83 fails.

Market Performance

On Tuesday, February 3rd, major indices diverged sharply: the Dow briefly hit record highs before closing down 0.3%, the S&P 500 fell 0.8%, and the Nasdaq plunged 1.4%. The VIX volatility index spiked to 20.37 intraday (highest since January 21) before settling at 18.00, up 10.16%.

Sector Rotation

A significant rotation from technology into "old economy" stocks is underway. Major software companies suffered severe year-to-date losses: ServiceNow down 28%, Salesforce down 26%, and Intuit down 34%. Meanwhile, industrial stocks like Caterpillar hit all-time highs.

AI Disruption Catalyst

Market anxiety stems from Anthropic's rollout of new automation tools for its Cowork product, raising fears that AI will disrupt traditional software business models. Asian markets sold off overnight, with Japan's TIS plunging 16% and Indian IT firms dropping 6-8%.

Critical Upcoming Events

Alphabet and Amazon earnings releases on Thursday (February 5th) could determine market direction. Strong AI monetization results may trigger a tech rebound, while disappointing guidance could deepen the selloff.

Analyst Perspective

Technical analyst James Hyerczyk suggests this may represent either healthy market broadening or the start of a genuine tech correction, with the outcome dependent on upcoming megacap earnings.