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Avoid the Pain Train — Watch This Critical Nasdaq Level

by | Sep 9, 2022

There wasn’t much in the way of macro news this week and no real fundamental shift in the economic landscape.

But we did have a historic run of selling in tech stocks in this Nasdaq downtrend… We saw seven straight down days in the Nasdaq, a streak we haven’t seen since 2016. And whenever we see a historic statistical outlier like this, we should expect a proportionate rebound in the other direction. 

But it’s also an indication that this market is in trouble, and the bears are here to stay. We can expect a bear market pop like what we’re getting Friday, but to have a once-every-seven-years sell-off as we did is something we have to pay attention to and respect.

Nasdaq Downtrend: How to Stay Out of the Pain Train’s Path

 In fact, from the open on Aug. 16 through the close on Sept. 6, we fell from $332.06 to $315.93 in the Invesco QQQ Trust Series 1 (Nasdaq: QQQ), which tracks the biggest 100 stocks in the Nasdaq.

A stock chart (nasdaq downtrend for Q4 2022)

The latest Nasdaq downtrend bottomed around the 12,000 level, an area of support we’ve bounced off before, making it a super important number to watch. I expect it’s going to get tested again, likely in the next few weeks. We should go higher from here, maybe back up to 13,000, but we’re still in a major Nasdaq downtrend of lower lows and lower highs…

A stock chart (nasdaq downtrend)

When that 12,000 level gets tested again, if and when it breaks, we’re going to hit new lows this year. So this is important…

If you’re trying to time into adding some of these tech stocks you think are going to run higher, I would add at the lows of the index and not chase the up moves because that’s when you’re going to get hurt. 

That’s when the pain train rolls through your town — and that’s no fun.

There’s one more thing we need to pay close attention to alongside this Nasdaq downtrend, so check out my short weekly recap video up top and let’s discuss.  

Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!

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WRITTEN BY<br>Jeff Zananiri

Jeff Zananiri

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