The Nasdaq 100 has fallen for four consecutive weeks, and a multi-year trendline has become the market's final technical support — one that is now facing a decisive test.
Peter Callahan, Goldman Sachs' chief specialist for the technology, media, and telecommunications sector, stated clearly in his latest weekly note that the Nasdaq 100 is retesting a key benchmark trendline connecting the April 2025 low with the March 2026 low. Last Thursday's closing level of roughly 26,630 points landed almost precisely on that line, and on Friday, with semiconductor stocks rallying, the index closed at 26,990 points — only about 1% above the trendline and still more than 14% below its October 6 record high of 31,361. Callahan wrote that the importance of this level is hard to overstate.
If the trendline breaks, Callahan's charts show the next clear support level near the March 2026 low at roughly 23,000 points, implying a further decline of about 15% from current levels. At the same time, extreme market sentiment indicators are flashing red across the board — last Thursday saw the largest single-day put option volume in Chicago Board Options Exchange history, while realized volatility in Goldman Sachs' flagship semiconductor stock basket surged to 93, the highest level since April of this year.
Four Straight Declines and a Historic Selloff
The Nasdaq 100 fell about 5% last week, marking its fourth consecutive weekly loss. The Philadelphia Semiconductor Index (SOX) has dropped 28% over the past 22 trading sessions, and Callahan noted that this pace of decline has been matched only a handful of times since 1997, including the dot-com bust, the 2008 global financial crisis, and the COVID-19 shock.
Callahan did not mince words in describing current sentiment: "It is hard to overstate how difficult the market is" — even though bottom-up data points such as memory pricing, compute pricing, supply-demand visibility, and third-quarter earnings remain strong, the AI and semiconductor sectors have entered a "rolling bear market" since this summer, down about 40% from their peaks, while macro uncertainty surrounding policy and the direction of Congress is "difficult to model."
In short, fundamental data remains bright, yet share prices keep falling, and the market has begun using today's prices to discount scenarios for 2028 that have not yet occurred.
Panic-Selling Indicators Emerge in Clusters
Callahan described last week's market flows this way: record put option volume, a sharp increase in ETF volume, volatility indicators showing "panic" characteristics, elevated sell-side skew, and technically severe oversold conditions.
His interpretation is that these indicators could technically "arguably help set the stage for a subsequent technical rebound" — but the wording includes qualifiers such as "arguably" and "to some extent," which by sell-side standards comes close to hinting "don't expect too much."
Bank of America strategist Michael Hartnett took a more cautious stance. According to Bloomberg, he noted that the SOX has now fallen 17% below its 200-day moving average, while genuine buying opportunities since 1996 have typically appeared when the index was 20% to 25% below that average, suggesting "dip buyers" may need to endure more pain. Morgan Stanley's Nick Savone pointed out that last Thursday the SOX plunged 12.2% in a single day, the second-largest one-day drop in the index's history, and the semiconductor sector's two-year forward price-to-earnings ratio has fallen to single digits for the first time in five years.
Selling pressure has been even more intense across Asia's AI supply chain. Citing Asian fund flow data, Callahan noted that in the week ending November 6, emerging Asia excluding China recorded $21.7 billion in net foreign outflows, the second-largest weekly outflow on record, with Taiwan (-$15.7 billion) and South Korea (-$8 billion) absorbing almost the entire impact.
The largest weekly outflow on record occurred just four weeks earlier, when outflows reached $27.6 billion. Taking a longer view, nine of the ten largest weekly outflows in history occurred in 2026, with the only exception being the March 2020 COVID-19 shock.
Memory: Is a 2x P/E an Opportunity or a Trap?
Callahan highlighted a "troubling" chart in his weekly note: the three DRAM giants — Micron (MU), SK Hynix, and Samsung — are currently trading at forward price-to-earnings ratios of 3.8x, 2.2x, and 2.6x respectively, while the DRAM spot price index has risen more than tenfold since late 2024 and remains near historic highs.
The logic behind such extremely low valuations is that investors believe current earnings already represent a cycle peak and anticipate that as data center construction slows in 2028, today's supply shortage will turn into tomorrow's overcapacity. Callahan's assessment was just three words: "Tricky, right?"
TrendForce expects fourth-quarter DRAM contract prices to rise about 20% quarter over quarter, down from 40% in the third quarter and 80% in the second quarter, indicating that contract price momentum is slowing.
Nowhere Left to Hide in Safe Assets
On the question of where safe-haven money is flowing, Callahan observed that consumer staples have attracted buying interest, but valuations are already notably expensive. The valuation premium of S&P 500 consumer staples relative to the broader S&P 500 has risen to its highest level in more than 10 years, at roughly 6 P/E points above, versus a long-term average of only about 1 point. More extreme still, the consumer staples index's 24-month forward P/E is now about twice that of the semiconductor index — meaning toothpaste and cereal are valued at twice the chips that power global data centers.
Within large-cap technology, analog semiconductors were once seen as a relative safe haven, and Texas Instruments (TXN) had shown some resilience, but it also broke below support late last week. Meanwhile, Caterpillar (CAT) has nearly halved from its June high, falling from about $1,060 to $559.
Callahan judges that it won't take long before investors start focusing on names whose "gains may have already gone too far." The Goldman Sachs Delta One team already holds a short position in a consumer staples basket and earns positive carry from holding the swap.
Strong Earnings, but the Market Looks Away
For bulls, perhaps the most frustrating signal comes from the earnings data itself: the information technology sector continued to lead the market during the third-quarter reporting season. According to Goldman Sachs' portfolio strategy team, 80% of technology companies beat consensus estimates by at least one standard deviation (versus 62% for the S&P 500 overall), only 2% issued downward revisions, and on the revenue side, 75% beat by one standard deviation, with none posting a comparable revenue downgrade.
Yet the market has been unmoved, and the reason is clear: investors have stopped paying for earnings already delivered and are instead discounting expectations that may not materialize in 2028. As Callahan put it, this is a market to be navigated "day by day," not one that rewards anticipation.
This week is packed with catalysts. Tuesday's CPI release (core CPI expected at +0.3% month over month) is seen as key to whether the Federal Reserve raises rates in December, with TSMC's monthly sales data and CoreWeave's earnings due the same day; Applied Materials and Nvidia will report on Thursday and at month-end respectively, both highly anticipated potential turning points for the market.
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