Inside Markets — Short-Term Trend

AI-themed equity charts broke short-term trend and pattern support on Monday. The chart of Philadelphia Semiconductor Index (SOX) is an easy catchall, but we look at each position as well. From a technical perspective only, the SOX and its AI-themed constituents (NVDA, AVGO, MRVL and TSM) are still vulnerable to more downside until they regain those technical support (now resistance) levels. The SOX is testing its resistance level at ~5100 this morning. While it seems unlikely, a close above ~5100 would be a very encouraging development. Independent power producers like VST and CEG face a similar technical challenge after breaking key levels on Monday.

In some ways, the overwhelming interest and response to DeepSeek’s breakthrough is more important than the technological accomplishment. The DeepSeek news is already causing Western model builders to adjust metrics and respond in unique ways that steepen the cost curve. Hyperscalers will be able to provide inference at a lower cost, which will result in dramatically higher usage and expand the list of potential beneficiaries.