Nasdaq Falls Below Key Support as AI Trade Faces Its Biggest Test Yet

Spread love

By S. JHA

Veteran trader Mark Minervini warns that the recent technology selloff could be the first serious challenge to AI-driven market leadership as Nasdaq slips below its 50-day moving average.

Mumbai, June 24, 2026 — For much of the past year, investors have treated artificial intelligence as a one-way trade. The extraordinary rise of AI-linked companies, led by semiconductor giants and hyperscale technology firms, has powered stock markets to record highs and created a sense that every dip was merely another buying opportunity.

That assumption is now facing its first meaningful challenge.

Veteran trader and market strategist Mark Minervini warned that the recent technology-led selloff should not be viewed as an isolated event. According to Minervini, several developing narratives are beginning to converge, creating pressure on the market’s AI-driven leadership.

The most important signal, he argues in a post on X, is technical rather than emotional. The Nasdaq recently suffered what traders call a “distribution day” — a session in which prices decline on rising volume. Such moves often indicate institutional selling rather than routine profit-taking by retail investors.

More significantly, the technology-heavy index closed below its 50-day moving average for the first time since reclaiming that level in April. For momentum investors, that development matters because the 50-day moving average has served as a key support level throughout the AI rally.

The weakness was not limited to a handful of stocks. Market leadership narrowed considerably as investors shifted money into traditionally defensive sectors such as consumer staples, healthcare and utilities. Such rotations often occur when investors become concerned about valuations, economic growth or earnings sustainability.

Yet Minervini is careful not to declare the end of the bull market.

“Bull markets do not die because of old age,” he noted, pushing back against arguments that the rally has simply lasted too long. Historical data supports his point. Several bull markets in the past century lasted longer than the current cycle, while many delivered larger gains. The late-1990s technology boom, which is increasingly cited as a parallel to today’s AI-driven advance, persisted far longer than many sceptics expected.

However, the comparison with the dot-com era cuts both ways.

One of the strongest similarities between 1999 and 2026 is valuation. By several measures, US equities appear stretched. Total stock market capitalization relative to gross domestic income is hovering near record highs, approaching levels seen during the peak of the internet bubble. Such valuations do not necessarily trigger an immediate crash, but they leave markets vulnerable to disappointment.

The challenge facing investors is that AI remains a transformative technological story while stock prices may have already discounted years of future growth. This creates a situation where even strong earnings can struggle to justify elevated expectations.

For now, the market appears to be entering a phase of greater selectivity. Investors are rewarding companies with proven earnings power while becoming less tolerant of speculative valuations.

Minervini’s advice reflects that reality: protect capital, avoid lagging stocks and enforce disciplined stop-loss levels. In other words, this may not yet be the end of the AI bull market, but it could mark the end of indiscriminate buying.

The coming weeks will reveal whether the recent selloff is merely a healthy correction within a powerful uptrend or the beginning of a broader reassessment of AI-driven valuations. Either way, the market’s most crowded trade is no longer moving higher without resistance.