2/4 US stocks crashed across the board! Software stocks suffered an epic massacre, QQQ broke support and plunged! Is Thursday the last chance to escape?
The short-term trend of the market has broken down, but it does not mean the end of the bull market. The short-term uptrend of tech stocks represented by QQQ has been violently broken, with two consecutive days of heavy-volume declines destroying the consolidation platform of the past two weeks. This is a short-term trend breakdown and does not signify the end of the 2026 bull market.
Such emotional panic selling usually triggers a technical oversold rebound within 48 hours. A recovery rally is expected on Thursday or Friday, which presents an opportunity to reduce or adjust positions rather than blindly adding leverage.
The core logic behind the crash lies in the market's fading patience for AI commercialization. Despite the hype around AI applications over the past two years, the latest earnings reports show that software companies' revenue growth has fallen short of expectations, while massive computing costs have compressed profit margins.
The trigger, AMD, reported decent revenue but provided weaker-than-expected guidance, shattering the illusion of infinite growth in AI computing demand. Under pressure from NVIDIA, its profit margins are constrained, directly dragging down the semiconductor sector.
Institutions, to meet margin requirements or hedge risks, are dumping liquid assets at any cost, causing both good and bad stocks to fall. Such indiscriminate selling is often a sign of a short-term bottom.
Looking ahead, a rebound is expected on Thursday or Friday:
QQQ's RSI has entered oversold territory, indicating a need for mean reversion. SPY's decline is much smaller than QQQ's, and sectors like banking, energy, and industrials are still holding up, suggesting no systemic risk.
In the options market, Wednesday's heavy put options have yielded substantial profits. Short sellers will likely take profits on Thursday, creating natural buying pressure when they cover their positions. Today's panic selling has shaken out weak hands, making the market lighter and easier to rebound.
On Thursday, watch the first half-hour after the open. If the market opens lower but does not hit new lows on low volume, it could signal a counterattack. Stay calm and differentiate your holdings. Software stocks with no earnings support and relying on AI hype should be sold on rebounds, while solid tech giants can be considered for gradual entry.
$AMD(AMD.US) Watch for support near $200 and rebound opportunities.
$Microsoft(MSFT.US) A cash-rich giant with solid earnings; the dip may be a buying opportunity.
$Tesla(TSLA.US) $400 is a key psychological level; as long as it holds, consider trading between $400 and $450.
Palantir (PLTR) is not recommended for chasing highs. Its consecutive bearish rallies are a red flag, and today's plunge is no surprise.
Consider hedging risks with stable stocks like Berkshire Hathaway, Merck, and Costco.
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