While everyone was busy writing the Nasdaq’s obituary this morning, the index responded, “Not so fast.” After falling more than 2% intraday, the Nasdaq erased all of the early declines and not only finished higher, but it actually saw a healthy gain of over 0.5%. To put today’s move in perspective, even with the volatility of the last several months, the last time we saw a similar positive reversal (down 2%+ intraday, finished up 0.5%+) was back in February 2018 (2/6 and 2/9).
Before the two occurrences in February 2008, you have to go all the way back to the Financial Crisis to find another occurrence when there were nine in the period spanning January 2008 through February 2009. The real sweet spot for these types of reversals, though, was in the late 1990s and early 200s. In the runup to the March 2000 peak, there were ten similar reversals and then another 22 from the dot-com peak through the 2002 low. As for the Nasdaq’s return going forward, unfortunately, these types of reversals aren’t indicative of much besides the fact that there was an upside reversal that day. Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.