On Thursday the Financial Times reported that OpenAI told its investors their ARR (annualized revenue rate) would be around $50B vs the $70B they had originally estimated. This news caused markets to sell-off, especially tech stocks related to the AI trade. However, OpenAI responded to the report after the market closed and clarified that they were still in fact on track to earn $70B and that there was some confusion on the way the revenue was being accounted for. The Financial Times also corrected it in their report, essentially retracting their original claim. This sent futures higher overnight which carried over into Friday's session.
The Nasdaq did lead on Friday after the OpenAI clarification, closing up 0.64%. However, semiconductors and AI related stocks were still weak as the SOXX and SMH both closed down about 0.70%. Even though OpenAI did clarify their revenue estimates, it may have brought on some concern about concentration in the AI basket of stocks. Meanwhile the S&P gained 0.59% while the Russell 2000 added 0.46%. With the rally back in stocks, the VIX closed back under $15, falling 3.7% to finish at $14.84.
For Monday, nothing changes for the Nasdaq as it continues to trade near the middle of its big primary daily uptrend (white). This continues to be the only range to watch for now with resistance at 28,125-28,150 and support at 26,875-26,900 from both ends of this range.
The S&P gapped above its new primary downtrend that it started on Thursday and closed above it to start a new primary uptrend (white) heading into Monday's session. It did rally up to the last resistance (blue) at 7,820-7,822 that I mentioned in the previous update. It also hasn't invalidated any of its prior trends so there are still a lot of support/resistances to look at.
The first resistance to watch on Monday will again be at its prior uptrend (blue) where it got rejected at yesterday. It will be a bit higher for Monday at 7,823-7,825. If it breaks through it this time, there will be more resistance just above it around 7,830 from its next uptrend (light purple). After that, the last resistance potentially in play for Monday would be at 7,868-7,870 from its next uptrend (yellow).
On a pullback, the first support to watch will be at 7,810 from its prior uptrend (orange) which it finished just above yesterday with a close of 7,811.54. So there is potential for an open below the 7,810 level on Monday, in which case that orange uptrend would become resistance rather than support. After that on a pullback, the next support will be at about 7,785 from its next uptrend (red) and if that doesn't hold its primary uptrend (white) would be next at 7,777-7,778. If its primary uptrend doesn't hold, the last daily support potentially in play would be at about 7,750 from its prior downtrend (peach).
The Russell 2000 continues to trade within its big primary downtrend so it doesn't start any new daily trends heading into Monday. It did have a follow through bounce to Thursday's reversal, so it now has bullish divergence on the daily which is an early sign of a bottom for small caps. However I wouldn't say it's an all clear until it confirms above this big downtrend which will continue to be resistance around 2,858 on Monday. The only daily support to watch will also be from the bottom of this range at 2,675-2,680, but that is very far and is unlikely to actually be tested.
