Stock market » The NASDAQ enters a correction with a fall of 10%

The NASDAQ enters an official correction with a 10% drop

The NASDAQ, the second largest stock exchange in the United States behind the NYSE, has officially entered correction territory now that it is down 10% from its all-time high. The question now is whether the bears can push it below 15,000?

There is a saying in the stock markets that “ups are a process, downs are an event”. And that ties in with the trend that market tops can be a slow and difficult experience, while market bottoms can happen quickly. This is not always the case, but it looks like we are seeing it in the US stock market right now. Compare the March 2020 V-bottom to price action from the NASDAQ 100 all-time high and you’ll see what we mean.

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Price action has been spotty over the past two months, although bearish momentum is intensifying as the returns rise before the Federal Reserve’s planned hikes. So can prices accelerate lower in the stock market from here? Most likely. But markets rarely move in a straight line and bear markets/deep corrections are notorious for their countertrends.

stock market nasdaq 20012022

In that sense, the NASDAQ 100 is down more than 10% from its all-time high, confirming it as a pullback correction. Headlines aside, this is a high-profile event, and that alone leaves the index at risk of a corrective bounce. But we also have the 200 day moving average EMA and the 15,000 level just below yesterday’s close, which increases the odds that it won’t go down immediately, coupled with the fact that US United yields have stopped rising yesterday (which was a key driver for tech stocks lower) and the NASDAQ version of the VIX (NDX) fell yesterday, despite the index’s decline. nasdaq January 20, 2022

Looking at the daily chart, bearish momentum is now accelerating lower on the NASDAQ 100. However, three clear areas of support stand out.

  • 15,000 because it is a round number, and right next to the 200 day moving average EMA
  • 14,800 – 14,900: gap not closed, Fibonacci projection of 138.2%
  • 14,834 – 14,566 – October Low, 100/161.8% Fibonacci Projection, 23.8% Fibonacci Retracement Long
  • Therefore, we suspect that the downside could be limited in the short term and prices could rebound from the 14,800 to 14,900 support zone if prices break above 15,000. But unless we see a decent pullback in yields of bonds, the central opinion remains bearish on equities. market to the lower support zone around the October lows. However, a direct return above 15,500 invalidates our bearish bias.

    By Matt Simpson, Forex » Official site

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    Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation to buy or sell foreign exchange contracts or CFDs. . Although the information contained in this document has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no liability for direct, indirect, or consequential damages that may result from anyone’s reliance on such information. .

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