US Tech forecast: the index is testing support and may break below it

The US Tech index is testing the support level and may break out of the sideways channel and begin to decline. The US Tech forecast for next week is negative.

US Tech forecast: key takeaways

• Recent data: US initial jobless claims for the past week stood at 187 thousand
• Market impact: the current data is negative for the technology sector

US Tech fundamental analysis

Initial jobless claims data indicates the unexpectedly strong resilience of the US labour market. In the week ended 18 July, the number of new claims fell to 187 thousand from a revised 209 thousand a week earlier and came in significantly below the forecast of around 211 thousand. The four-week average declined to 207.5 thousand, while the number of people continuing to receive benefits fell to 1.796 million. Taken together, these figures indicate that US companies are not yet resorting to large-scale layoffs despite persistent economic uncertainty.

This news has mixed implications for the US Tech index, although its short-term impact is more likely to be negative. On the one hand, the low number of claims confirms economic resilience and suggests that demand for software, cloud services, digital advertising, semiconductors, and corporate information technology may remain relatively high. A strong labour market supports household incomes and business activity, which is favourable for technology companies’ revenue in the long term.

US Tech technical analysis

For the US stock market as a whole, the news will also have a mixed impact. From a fundamental perspective, the low number of layoffs reduces the likelihood of a sharp economic downturn. Companies continue to retain employees, and households receive income and can sustain consumer demand. This is favourable for corporate revenue and reduces the risk of a significant deterioration in credit quality. However, at this stage, investors may pay more attention to interest rates, as strong employment figures mean the Federal Reserve is in no hurry to ease monetary policy.

The US Tech index continues to correct, although the pace of decline may gradually ease, increasing the likelihood of consolidation. The nearest resistance level has formed around 30,690.0, while the main support is located near 28,415.0. Despite the current correction, the medium-term uptrend remains intact. However, if buyer activity is insufficient, the index may continue to move sideways. If positive momentum resumes and the index consolidates above the resistance level, the next upside target could be 31,895.0.

The US Tech price forecast outlines the following scenarios:

• Pessimistic US Tech scenario: a breakout below the 28,415.0 support level could send the index down to 27,525.0
• Optimistic US Tech scenario: a breakout above the 30,690.0 resistance level could drive the index up to 31,895.0

Summary

The published data is a positive signal for the US economy but may have a negative short-term impact on the US Tech index. The main reason is the increased likelihood that interest rates will remain high for longer than previously expected. For the broader stock market, the effect is more balanced: strong employment supports corporate earnings and reduces the risk of an economic downturn, but at the same time limits the prospects of an imminent easing of Federal Reserve monetary policy. In the near term, the US Tech may remain under increased pressure, especially if government bond yields continue to rise. The nearest upside target could be 31,895.0.

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