- The Nasdaq 100 is trapped between the AI investment boom fueling optimism and a government shutdown freezing key U.S. data – a tug-of-war that could define Q4’s direction.
- Price action has stabilized after last week’s 4% drop, hovering around a key decision zone near 24,900, inside an H4 Fair Value Gap.
- Breakout above 25,043 could target new all-time highs; breakdown below 24,423 may reopen a sharp correction toward 24,000.
AI investment boom keeps growth afloat – For now
The International Monetary Fund (IMF) recently upgraded its U.S. growth outlook to ~2% for 2025, citing the AI investment boom as a crucial buffer against slowing global demand. Massive spending on chips, data centers, and digital infrastructure has kept U.S. output surprisingly resilient.
But there’s a catch: the same growth engine could also be a bubble in disguise. The IMF warned that AI-related valuations may have outpaced fundamentals, echoing the same patterns seen during the dot-com era. If sentiment flips, overextended tech stocks could unwind rapidly.
Institutions are taking notice. A Bank of America survey showed fund managers now view an “AI bubble burst” as the top tail risk for markets. And while corporate earnings have remained robust, analysts fear productivity gains may not fully justify current valuations.
Shutdown adds a new layer of risk
As AI propels optimism, the ongoing U.S. government shutdown is working in the opposite direction – freezing critical economic data releases and shaking investor confidence.
With reports like CPI and retail sales on hold, traders are flying blind. The lack of transparency means the Federal Reserve’s path toward rate cuts or policy shifts has grown uncertain. For high-beta sectors like tech, this uncertainty amplifies volatility.
Institutional flows show defensive positioning ahead of earnings season, as investors brace for potentially distorted data and policy misreads. In short: the AI narrative fuels hope, but the shutdown fuels hesitation – leaving Nasdaq’s next move hanging in the balance.
Nasdaq 100 balances on a knife’s edge
The Nasdaq 100 (Dec 2025 Futures) has been oscillating between relief rallies and corrective pullbacks after last week’s tariff-driven panic. The latest 4-hour structure highlights a tight range between 24,423 and 25,043, carved by volatility shocks from both political and economic catalysts.
Despite short-term recovery, traders remain cautious as liquidity thins and momentum slows near the H4 Fair Value Gap.
Currently, the market’s technical equilibrium mirrors the macro divide – optimism fueled by AI versus fear of a prolonged policy paralysis.
Technical outlook – Nasdaq 100 (Dec 2025 futures)
The 4H chart now reveals a clear Fair Value Gap (FVG) between 24,749 – 24,897, acting as the central decision zone for intraday traders.
This gap serves as the battleground where short-term bullish intent meets broader macro caution.
Price remains inside the FVG, showing early attempts at recovery but without follow-through momentum. The next breakout or rejection from this zone will likely determine whether the Nasdaq resumes its climb or extends its correction.
| Zone | Level | Bias | Description |
|---|---|---|---|
| H4 Fair Value Gap | 24,749 – 24,897 | Neutral | Short-term decision zone |
| Range High | 25,043 | Bullish target | Breakout zone for continuation |
| Range Low / Liquidity Pivot | 24,423 | Bearish target | Breakdown confirmation |
| All-Time Highs | 25,392 | Extension target | Full bullish expansion zone |
Bullish scenario: FVG reclaim and expansion
If bulls manage to defend the FVG and reclaim the upper bound at 24,900, Nasdaq could extend higher toward the 25,043 range high. A confirmed breakout may lead to further expansion toward the all-time highs at 25,392, effectively filling the prior imbalance.
Triggers for bullish continuation:
- A firm 4H close above 24,900–25,043, signaling absorption of selling pressure.
- Positive headlines on AI investment or any progress on ending the shutdown.
- Renewed dovish commentary from Fed officials stabilizing risk sentiment.
Targets: 25,043 → 25,392 → 25,600
Invalidation: 4H close below 24,749 reopens bearish control.
This path suggests traders are betting that AI’s fiscal strength will outweigh political gridlock.
Bearish scenario: FVG rejection and liquidity sweep
If the FVG fails to hold and price rejects near 24,900, bears could regain control – driving a retest of the 24,423 liquidity zone. A breakdown below that level may trigger a larger corrective leg toward 24,000–23,850.
Triggers for bearish continuation:
- Rejection candle near the upper FVG boundary (~24,900).
- Shutdown extension headlines or renewed tariff rhetoric.
- Breakdown below 24,423 confirming liquidity sweep and bearish momentum.
Targets: 24,423 → 24,000 → 23,850
Invalidation: 4H close above 24,900 nullifies bearish structure.
This scenario aligns with risk-off positioning and macro uncertainty persisting through October.
Final thoughts: Tension between hope and fear
The Nasdaq sits in a tug-of-war between structural optimism and macro fear.
The AI boom is the market’s engine – but the shutdown and inflation uncertainty are its brakes.
Price compression within the H4 Fair Value Gap signals that volatility is loading, not fading. The next clean break above 25,043 or below 24,423 could set the tone for the rest of the month.
Until then, traders should expect sharp whipsaws and reactive liquidity hunts as markets process each new headline from Washington and Wall Street alike.