The Nasdaq fell 14% from its November all-time high on Friday (21st), breaking the 200-day moving average and not only in correction territory, but also close to a 20% decline that meets the definition of a bear market. Meanwhile, the S&P 500 is suffering its biggest weekly loss since the March 2020 crash, and the index is less than 2% away from a correction.
History has taught me that since its inception in 1971, there have been a total of 66 corrections, 24 of which ended up in a bear market, and 37% turned into a bear market. Several analysts on Wall Street warned that U.S. stocks may fall further, and the dormant bear market will wake up.
Ralph Acampora, a senior technical analyst known as the “Godfather” of technical analysis, said that since the beginning of the U.S. stock market, the market has been turbulent, and the market’s bullish willingness has weakened. The Nasdaq fell below the 200-day moving average and Bitcoin recently plummeted below $34,000, all of which have caused a major collapse in market sentiment. one of the signs.
Acampora predicts that U.S. stocks will fall further, by 20% or more. He also suggested observing the VIX, the panic index, as a reference for US stocks bottoming out. In the past, when US stocks were about to bottom out, the VIX surged to at least 38 or 40 points, and is currently around 27.
Analysts at Zerohedge noted that the market currently has circuit breakers and other protections in place to prevent a rapid stock market crash. Markets could still plunge by more than 30% in just a few weeks, as seen in 2020, or continue to rebound with strong employment, ample liquidity, and a cooling outbreak, but who really knows? One thing is certain, when the S&P falls to the 200-day moving average, the risk is even greater, and investors must be careful about the presence of a bear market!
However, Mark Haefele, chief investment officer at UBS Global Asset Management, was optimistic that for long-term investors, it would not be a bad thing if market volatility cools the more speculative areas of the market. Some long-term growth stocks are selling at their best prices in months, which isn’t a bad thing, and the macro environment remains supportive.
There are still many uncertainties in the market, the Fed’s tightening policy cycle is not conducive to technology stocks and other growth stocks, and the latest earnings reports from Netflix, Goldman Sachs and others are disappointing, and Wall Street is holding its breath for this week IBM (IBM-US) ), Tesla (TSLA-US), Microsoft (MSFT-US), Apple (AAPL-US) heavy tech earnings reports.
So far, the market has ignored the tension between Russia and Ukraine, but this may change as US President Biden may change his stance and send 5,000 US troops to Eastern Europe. Moreover, the United States and the United Kingdom have begun to withdraw their embassies in Ukraine, making the war crisis of Russian troops pressing on Ukraine imminent.