Some Analysis of the Recent Nasdaq Correction

Pain for tech but not the broader market

The Nasdaq Composite has had a pretty good run over the last year:

But, just recently, the trend has run into some short-term technical weakness, dropping below the 50-day moving average:

And volatility hit a familiar peak level seen over the last few years:

This is now the third notable drawdown since the infamous March sell off a year ago. It’s been (so far) on par with the other two drops but did cross the -10% drawdown “correction” threshold:

However, unlike many of the drawdowns in the last few years, the S&P 500 barely took a hit:

The popular explanation for this is the ongoing rotation story, whereby money is flowing from tech into more traditional industries that are better captured by the S&P 500. Overall, it’s not too much to be worried about (if you aren’t overly tech heavy) but, as always, remains something worth monitoring. So, I’ll be sure to check back on these trends if we do happen to breach some new lows!

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