First Negative S&P 500 Momentum Signals Emerge as Mega-Cap Tech Breaks Down From October Highs

This analysis is based on the Seeking Alpha article [1] published on February 4, 2026, by JD Henning of “Value & Momentum Breakouts.” The report identifies a significant shift in market regime with the first negative Momentum Gauge signals on both daily and weekly timeframes for the S&P 500.

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The market data corroborates the technical bearish thesis [0]:

Index	30-Day Performance	Current Level
NASDAQ Composite	-2.43%	$22,879.60
S&P 500	+0.18%	$6,877.75
Russell 2000	+2.98%	Outperforming
Dow Jones	+2.65%	Outperforming

The divergence where tech-heavy NASDAQ significantly underperforms the broader S&P 500 is a hallmark of sector rotation away from growth/tech toward defensive or value-oriented segments [0].

A differentiated picture emerges among individual mega-cap technology stocks [0]:

Stock	30-Day Performance	Status
Microsoft (MSFT)	-14.95%	Most damaged - significant breakdown
Nvidia (NVDA)	-5.11%	Declining but holding support - lone exception
Apple (AAPL)	+1.10%	Relative stability
Alphabet (GOOGL)	+7.42%	Strong performer
Amazon (AMZN)	+2.70%	Holding ground
Meta (META)	+1.71%	Mixed signals

has suffered the most significant breakdown, consistent with reports that its cloud revenue growth slowed in Q4, potentially triggering reduced AI infrastructure spending [1].

Current sector performance reveals clear rotation patterns [0]:

• Basic Materials:
  +1.77%
  (cyclical, inflation hedge)
• Real Estate:
  +0.89%
• Consumer Defensive:
  +0.71%
• Financial Services:
  +0.55%

• Technology:
  -1.97%
  (leading decliner)
• Utilities:
  -3.73%
  (rate-sensitive)
• Consumer Cyclical:
  -1.42%
• Industrials:
  -0.65%

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According to Henning’s analysis [1]:

1. S&P 500 Daily Momentum Gauge
   : Negative (red)
2. S&P 500 Weekly Momentum Gauge
   : Negative (red)
3. Technology Sector Gauges
   : Negative across all timeframes
4. NVIDIA
   : The only mega-cap tech still holding key support

RBC Capital Markets strategist Lori Calvasina has noted “major deterioration” in the relative weight of the top 10 S&P 500 stocks [1]. The Magnificent 7 basket has underperformed the broader index, with the group down approximately 5% YTD while the equal-weight S&P 500 shows more resilience. The S&P 500’s heavy weighting in technology (~30%) means continued mega-tech weakness will disproportionately impact index performance.

AI-related tech spending across the S&P 500 has exceeded

over the past 12 months, with the Magnificent Seven responsible for roughly 28% of that spending [1]. Key concerns include:

• Microsoft’s cloud revenue deceleration
• Major customers developing custom ASIC chips
• U.S. delays in China AI chip export approvals affecting potential $50 billion in annual sales

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of the following factors:

1. Technical Momentum Reversal
   : The first negative daily and weekly Momentum Gauges since October highs historically precede meaningful drawdowns [1]. When both timeframes turn negative simultaneously, historical patterns suggest elevated risk.

2. Mega-Cap Tech Vulnerability
   : Microsoft has experienced a ~15% decline from October highs. NVIDIA remains the relative strength outlier, but a breakdown there would remove the last line of defense in the mega-cap space [1].

3. February Seasonality
   : February historically tends to be a weak month for the S&P 500 [1]. Combined with current negative technical signals, this seasonal factor amplifies downside risk.

4. NVIDIA-Specific Risks
   : Potential double-top pattern at $193 with neckline support at $175; forward P/E has contracted to 39 (below 5-year average of 45) [1].

• NVIDIA support levels
  : $175 (neckline) and $170 (initial target)
• Microsoft recovery
  : Whether cloud revenue deceleration is transitory or structural
• Federal Reserve policy signals
  : Rate cut trajectory and inflation data
• China policy developments
  : Resolution of AI chip export review

• Sector rotation suggests relative strength in Basic Materials and Energy
• Small-cap Russell 2000 outperformance (+2.98%) indicates broadening market participation
• Defensive sectors showing resilience for risk-averse positioning

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The technical and fundamental evidence identifies a meaningful regime change in U.S. equity markets, transitioning from a risk-on environment driven by mega-cap technology leadership to a risk-off posture characterized by sector rotation, negative technical momentum, and broadening weakness among growth stocks.

1. First negative Momentum Gauges on both daily and weekly timeframes since October 2025 [1]
2. Technology sector down -1.97% in a single session, worst among all sectors [0]
3. Microsoft breakdown of ~15% from October highs represents the most significant mega-cap tech damage [0]
4. NVIDIA represents the last mega-cap tech name maintaining relative strength—a critical inflection point [1]
5. Sector rotation favors Basic Materials, Energy, and defensive sectors over growth [0][1]
6. February seasonality historically unfavorable for S&P 500 performance [1]

The combination of negative Momentum Gauges, February seasonality, and mega-tech weakness creates an environment where elevated vigilance is warranted. Information gaps remain regarding AI capital expenditure sustainability, China policy resolution, and whether the current rotation represents a temporary pullback or longer-term leadership change.