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Nasdaq Enters a Bear Market, Down Over 20%, Where To From Here?

The Nasdaq entered an intraday bear market on February 24. It closed in one today. What's next?
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Nasdaq $NDX chart courtesy of StockCharts.Com, annotations by Mish

Nasdaq $NDX chart courtesy of StockCharts.Com, annotations by Mish

The amazing Nasdaq reversal on February 24 went from from ∼3% down to ∼3% green. That 6% rally is now nearly wiped out.   

Where to From Here?

The dotted blue line show weekly support levels at the intraday low on February 24 at the 1300 level,  then the 1200 level,  and 1100 level.  

A look at a monthly chart puts things in better perspective.

Nasdaq Monthly Chart

Nasdaq $NDX chart courtesy of StockCharts.Com, annotations by Mish

Nasdaq $NDX chart courtesy of StockCharts.Com, annotations by Mish

That chart shows how literally insane the market had rallied. 

Thank the Fed.

My most optimistic support level that could hold is the 8000 level. That would be a decline of another 40% from here making a total decline of about 52% from the top.

But I doubt it stops there as it would only take back a mere 2 years of the bull market.

There's a better chance of support holding at the 6000 level, taking back 5 years of gains. 

That would be a decline of 64% from the top, which seems about right for a brutal decline. 

And if that level did not hold, and it might not, then consider the 4,000 level, a decline of 76% from the top.

What Looks Cheap Will Get Cheaper

Facebook was 242 when I captured that chart. Today 187. People thought it was cheap at 242. It wasn't. And it isn't cheap today at 187. 

There's support at 120. And it will likely bounce then. But 80 has a better chance of holding.

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Tesla Monthly Chart 

Tesla (TSLA) chart courtesy of StockCharts.Com, annotations by Mish

Tesla (TSLA) chart courtesy of StockCharts.Com, annotations by Mish

Strong EV competition is coming up everywhere and Tesla quality certainly isn't its strong suit.

Tesla has strong support at 50. Maybe buy and holders get lucky and the decline stops at 500 or 100. 

Realistically, expect at least another 50% decline from here. 

People Have No Idea What's Likely Coming

S&P 500 chart courtesy of StockCharts.Com, annotations by Mish with thanks to Jeremy Grantham. Chart as of February 23, 2022.

S&P 500 chart courtesy of StockCharts.Com, annotations by Mish with thanks to Jeremy Grantham. Chart as of February 23, 2022.

Most People Have No Idea How Much Stocks are Likely to Crash

I repeat my February 23 comments made one day before the big Nasdaq reversal, now nearly wiped out.

Most People Have No Idea How Much Stocks are Likely to Crash

This is not a fire drill. This is a 20-alarm inferno.

Don't expect the Fed to rescue this mess, but do expect them to try. The beneficiary will not be the US stock market. The beneficiary will be gold.

This post originated on MishTalk.Com.

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