Nasdaq Composite Index pulls back in premarket as profit-taking slows chip rally momentum

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Index holds 20 EMA ahead of ADP data

Highlights

Nasdaq pulls back from 23,550 after profit-taking follows chip stock buying surge
Price holds above 20 EMA at 23,400 as RSI signals bullish continuation bias
Investors watch ADP jobs data as Nasdaq tests support following short-term institutional exit

The pullback is largely driven by profit-taking. Tuesday’s session saw not only the Nasdaq rise sharply, but also the S&P 500 and the Dow Jones Industrial Average rise to fresh record highs. This triggered a wave of short-term exits from chip-related names such as SanDisk and Micron, which had posted outsized one-day gains of 27.5% and 10%, respectively. As of the latest premarket data, SanDisk is down 2%, while Micron has slipped 1.9%. Nvidia is also slightly lower by 0.1%. These slight drawdowns indicate a cool-off phase following Tuesday’s euphoria.

Nasdaq Composite price chart (Oct 2025 - Jan 2026). Source: Tradingview

Technically, the Nasdaq index is finding near-term support at 23,400 on the 20 EMA, while stronger support is seen at 23,300 near the 50 EMA. Both levels will be key to watch as they represent potential zones where buyers could re-enter if macroeconomic data today provides renewed optimism. The RSI on the 4-hour and daily timeframes is still positioned above 55, reinforcing the current bullish momentum despite the pullback.

Labor data may decide if the index extends above resistance at 23,700

On the macro front, investor attention is now shifting toward the ADP Non-Farm Employment Change data scheduled for release later today. The forecast stands at 49K, following a previous reading of minus 32K. Since ADP tends to lead the broader NFP report by two days, a positive surprise in the actual data could reignite bullish interest across equities. Strong job creation tends to boost consumer spending, which feeds into earnings expectations for tech-heavy indices like the Nasdaq.

Until then, market participants are reassessing risk. The combination of recent gains, rising volume, profit-taking, and macro anticipation sets the stage for an extended price reversal or a continued bullish expansion. If economic data confirms resilience in labor markets, the Nasdaq Composite may attempt to extend above the near-term resistance at 23,700.

In recent analysis, we discussed how the Nasdaq held above the 20 and 50 EMAs while stalling near 23,470 resistance. Rising volume and weak ISM data supported dovish Fed expectations, though RSI showed limited conviction.

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