The NASDAQ index is trading to a new session lows. The current price is trading at 10643.46. That's down -456 points or -4.11%. The low price just reached 10621.56
As mentioned in an earlier post, the Nasdaq index was testing the key 200 week moving average at 1.0795 area shortly after the open today. Early this week, the price dipped below that level but rebounded yesterday after the FOMC decision, giving traders hope for a technical rebound into the end of week trading.
However, the sharp decline seen at the open today, along with the subsequent follow-through selling has now pushed the price comfortably below that key moving average level. Stay below is bearish.
The last time the price of the NASDAQ closed below its 200 week moving average was during the week of March 16, 2020 at the start of the Covid lockdowns. That break lasted only one week. The next week the price closed higher and the bullish run started, ultimately sending the NASDAQ index up 144% from the March 2020 low.
Since then, the price has now fallen 34.3% over a 29 week period. During that time, the 50% midpoint of the move up from the March 2020 low has also been broken at 11421.82.
It would now take a move back above the 200 week moving average, and the 50% retracement level to tilt the bias more in favor of the buyers once again. Absent that, and the sellers remain more in control.
What are the next downside targets?
Looking at the weekly chart above, the next downside target comes against the:
- Swing low from the September 20, 2020 trading week at 10519.49.
- Below that the 61.8% retracement of the move up from the pandemic low comes in at 10291.29.
- The swing high before the pandemic swoon to the downside back in February 2020 comes in at 9821.12. A move to that level would equate to a 39.4% decline from the all-time high reached in November. It is not unusual for stock markets to move down by that much during recession.
Of note is that the move lower during the pandemic move took the NASDAQ down -32.04%. The current decline of 34.4% from its November high has now surpassed that percentage correction move.
For the S&P index, it is currently trading down -126 points or -3.32% at 3664.28. IT remains above its 200 week moving average at 3502.60 and also above the 50% midpoint of the move up from the March 2020 Covid low at 3505.24. With both the 200 week moving average and 50% retracement within a few points of each other, that seems like a strong target on further weakness.
So far the S&P index has moved down 24.11% from its all-time high. A move to the 200 hour moving average of 50% retracement targets would imply a 27.17% decline from the all-time high. That still seems potentially low.
For your guide, the S&P index fell a whopping -35.41% during the Covid decline from February to March 2020.
