AI Jitters Spread

Last week I warned you about the prospect of a 10% correction unfolding in the S&P/ASX 200 [ASX:XJO].

After another sharp sell-off this week, we are well on the way there.

The false break of February’s high has been confirmed, and now the target at 7,900 comes into play. That is 6% below the current level of 8,429.

Last nights price action in the States was particularly telling.

Nvidia’s [NASDAQ:NVDA] results came out on Thursday morning and the stock ran in the overnight market. That helped stocks in Australia jump over 100 points yesterday.

But when US stocks opened the selling began and didn’t stop until the close. The S&P 500 opened up nearly 100 points and then closed down over 100 points. A 230 point (3.5%) range on the day.

A move like that tells you the big sellers are now stepping in and the current weekly uptrend is under threat.

If prices close around current levels or lower, a monthly sell pivot will be confirmed in the S&P 500 and Nasdaq.

The long-term trends will still be up, but it means the risk of further downside will increase.

Nvidia had an 8% range on the day yesterday and closed at its low for the day.

It looks like we will see more downside, but I point out in today’s Closing Bell where Nvidia could be worth picking up if the correction continues.

There is definitely some selling pressure building up in various corners of the AI story.

Blue Owl Capital [NYSE:OWL], a major financier of the AI data centre build-out, is down nearly 50% since the start of the year.

Oracle Corporation [NYSE:ORCL], and Meta Platforms [NASDAQ:META] remain weak and could accelerate to the downside the way their charts are looking.

Another wild card is the continuing collapse in the Japanese Yen despite the fact their bond yields continue to race higher.

The USDJPY is now just below the level where the Bank of Japan intervened in the Yen to halt its collapse in July 2024.

So there is a lot to discuss in today’s Closing Bell as we race towards the end of the year.

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