The Nasdaq Composite Index is down 2% in the past month or about 1% YTD in 2026. As you can see from the chart, the index has been essentially chopping sideways for over 3 months now. This comes after 7 months of consistent gains from April to the end of October 2025. Whether this is just consolidating the prior gain or a sign of market exhaustion remains to be seen.

The RSI fell to its lowest level since April of 2026 during the past month. Support at the 100-day EMA also failed for the first time in roughly 9 months.

The index is trading above all key exponential moving averages (EMAs) and has found support at the green trend line multiple times in recent months. The RSI at 56 has room for another rally in the months ahead, which I think is likely after consolidating and forming a base over the past few months.

Global liquidity, often measured by aggregate M2 money supply across major economies (US, Eurozone, China, Japan, etc.), has shown modest growth over recent months, including into early 2026. However, the pace appears normal to slightly below average in some metrics, with mixed signals. Some analysts have warned of a potential turning point or downward shift in global liquidity into 2026, citing risks to risk assets.

Big Tech firms are ramping up spending dramatically—estimates point to $600–650 billion collectively in 2026, much of it on data centers, chips, and AI infrastructure. This "arms race" raises concerns about overbuilding, diminishing returns, margin compression, and potential free cash flow turning negative for some companies.

The Mag 7 trades at a forward P/E around 29x (a premium to the broader S&P 500), though down from prior peaks. Earnings growth for the group is projected to slow to about 18% in 2026—the slowest pace since 2022.

New AI tools (e.g., from Anthropic and others) are raising fears that they could automate or replace legacy software/SaaS functions, threatening incumbents like Microsoft, Salesforce, or ServiceNow. This has already contributed to recent tech sell-offs and a "crisis of confidence" in parts of the sector.

Geopolitical risk also remains as U.S.-China tensions, tariffs, or supply chain issues (especially semiconductors) could disrupt growth. Higher-for-longer rates or any slowdown in global liquidity could pressure high-valuation growth stocks.

I still expect solid (but more moderate) gains for tech in 2026, driven by AI productivity boosts. However, risks are elevated compared to prior years—markets have thin margins for error amid stretched expectations and high concentration. Volatility is likely, as seen in early 2026 pullbacks.

I continue to like the hardware side of AI data centers or the “picks and shovels” plays, as I think the downside risk is much lower with these companies. I am looking at the maturation of AI rather than pure hype and monitoring the shift toward practical infrastructure buildout, energy demands, security needs, and real-world applications.

Takeaway: I expect another year of solid gains for the Nasdaq, driven by AI, robotics, and macro factors such as lower rates and greater global liquidity. But I do have concerns, as mentioned above, and think we should expect lower growth in 2026 versus 2025. Near-term, I have some concerns about the fallout from the release of Epstein files, as it is already having significant ramifications through political bodies, major corporations, and industries where high-level names have been exposed.