Within a few days, news of China's Deepseek has gone from a gentle breeze to a hurricane. Alongside many impressed voices, we have also heard critical voices about Deepseek's capabilities. But as always, when the market discovers a needle, it shoots first and thinks later. We leave it to the specialists to judge Deepseek. What interests us is how the market will react once the news has been digested.

The big AI stocks have performed incredibly well since 2014 and are now responsible for around 55% of the market capitalization of the Nasdaq 100 Index. In comparison, yesterday's correction has no significance...

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Several AI stocks are already represented in the S&P500 as well. This index has seen strong accumulation over the past few weeks - albeit without any major advances being realized. This is rather bearish, especially if this accumulation now subsides...

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The broad index has only just managed to regain an optimistic mood...

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The same picture with the Nasdaq Composite Index: the fact that it was unable to realize any sustained advances despite strong accumulation is a bearish sign...

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Moreover, the mood has never been optimistic since December. As we were able to experience yesterday, these are the moments when the bears have the best chance ...

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Crucial for the coming performance of AI stocks is in particular the share of Nvidia Corp. NVDA The after open action has been negative since October, i.e. the big investors were sneaking off - and nothing has changed yet...

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Even if the chances for a technical recovery are there, it is advisable to wait and see whether the needle has burst the bubble - or whether it is just a temporary thunderstorm.

AI stocks may take a back seat for a while and caution towards the overall market is warranted (Thoughts 66). However, the Magnificent 7 should provide some support. They have not been as oversold as they are now for two years...

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