The Nasdaq is almost all the way back

The Nasdaq Composite has almost fully made back all of its losses. After falling more than 30% from its 52-week high, the tech-heavy index has almost retaken that high, pulling within 1.5% by Wednesday. This is, by far, the fastest turnaround in its history. 

By the time the index cycled from more than 30% below a 52-week high to within 1.5% of it, as it did on Wednesday, it never failed. It closed at a fresh 52-week high within three weeks every time. Even when looking at smaller 20% drawdowns, it also never failed.

The Nasdaq has also enjoyed a "golden cross", a mostly ineffective signal that gets a lot of attention regardless. The curious thing about the current cross, when the 50-day moving average rises above the 200-day average, is that it triggered when the Nasdaq was already so close to an all-time high.

That didn't seem to dampen its forward returns much. It was not a great buy signal, but it was not a consistent reason to sell, either.

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We also looked at:

  • A closer look at what happens when the Nasdaq recovers from big drawdowns
  • Not a single domestic or overseas index, ETF, bond, or commodity we follow is showing pessimism
  • More than 35% of the funds we follow currently show optimism

The post titled The Nasdaq is almost all the way back was originally published as on on 2020-06-05.

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