July 8, 2026
Good afternoon, Five Star Traders!
The market is sending some clear technical signals this week that deserve our attention.
Nasdaq Fails to Hold the 50-Day SMA
The Nasdaq Composite has now posted two consecutive closes below its 50-day simple moving average. This is a meaningful shift. The 50 SMA has served as a reliable dynamic support throughout much of this bull market. Breaking and closing below it for two sessions suggests short-term momentum has turned negative and that buyers are stepping back at these levels.
Key observations:
- The index is now trading below a level that previously acted as a floor during pullbacks.
- This increases the risk of further near-term weakness or consolidation until the Nasdaq can reclaim the 50 SMA on a closing basis.
- Breadth and leadership (especially in semiconductors and high-growth names) have deteriorated alongside the price action.
While this doesn’t automatically signal the end of the larger uptrend, it does warrant tighter risk management on short-term positions and a more selective approach to new long entries until we see stabilization.
NBIS Reversal — Now Two Closes Below the 50 SMA
Nebius Group (NBIS) has reversed sharply and now has two closes below its 50-day SMA. This is a significant development for a name that had been one of the stronger AI infrastructure plays earlier this year. The stock had benefited from major partnerships (including the large Meta-related deal), but the recent Meta news about potentially commercializing its own excess compute capacity created real concern among investors.
NBIS – Daily Chart 7.8.26
The result:
- NBIS has given back a large portion of its gains in a short period.
- Two closes below the 50 SMA confirm the short-term trend has flipped lower.
- This type of reversal in a high-beta AI name often leads to extended consolidation or further downside until new catalysts emerge.
We’ll continue to monitor whether NBIS can stabilize and reclaim the 50 SMA or if this becomes a deeper corrective move. If and when it can reclaim the 50 SMA on the daily chart, I will take new entries for a short-term pre-earnings momentum move. We have just entered the Earnings Hot Zone for this stock, and while my early, more aggressive entries were stopped out by the depth of this pullback, I would be happy to take secondary entries if and when high-volume buying comes into this name.
How I Handle Stops on Short-Term Options vs. Long-Term Stock Positions
This is a question I get often, so I want to be transparent about my approach: On short-term options trades, I am very disciplined with the 50-day SMA.
If a stock or index I’m trading options on closes below the 50 SMA, I generally exit the position unless my options are not worth much, and there is not much to be gained by closing the position. Short-term options are time-sensitive, so I treat the 50 SMA as a hard technical line in the sand. Staying below it usually means the momentum has shifted against me, and I’d rather take a small loss than fight the tape.
On long-term stock positions, however, my approach is very different. I continue to hold high-quality names through dips below the 50 SMA and, in many cases, even add to positions on weakness. The 50 SMA is still respected as a level, but it is not an automatic sell signal for core holdings. For these holdings, I use weekly chart patterns. I also use the 50 SMA on the weekly chart. For NBIS, this level is all the way down at $125, and the stock is currently reading at $216, so we are nowhere near a complete weekly reversal. This move is more about the short-term timeframe reversal that impacts short-dated options trades.
For long-term stock positions, these are businesses I want to own for years, not weeks. As long as the fundamental story remains intact and the long-term uptrend (higher highs and higher lows on the weekly/monthly chart) is not broken, dips below the 50 SMA can be potential buying opportunities.
This distinction is important:
- Short-term options = tight technical discipline (50 SMA = stop zone)
- Long-term stocks = focus on business quality and bigger-picture trend
The goal is to protect capital on tactical trades while giving our highest-conviction ideas room to work over time.
Bottom Line
The Nasdaq breaking below the 50 SMA with two closes is a short-term warning sign worth respecting. NBIS’s reversal below its own 50 SMA shows that even former leaders in the AI infrastructure space are not immune to sharp corrections. As always, we adjust position sizing and risk management based on what the charts tell us — staying aggressive on high-conviction, long-term ideas while remaining nimble on shorter-term trades.
Trade smart, manage risk, and stay patient.
Danielle
Disclaimer: This newsletter is for educational and informational purposes only and does not constitute financial, investment, or trading advice. All trading and investing involves risk of loss. Past performance is not indicative of future results. Always do your own due diligence.
