Chart Analysis: NASDAQ On The Verge Of 30% Drop

The Nasdaq Composite is nearing its all-time high of 20,2024, prompting a divergence in sentiment. While many retail investors remain bullish and eagerly buy every dip, institutional investors ("smart money") are exhibiting increasing caution.

This concern stems from elevated market valuations and a significant technical pattern observed on the Nasdaq chart, tracing back to the Covid lows of 2020. A parallel channel, connecting the 2020 low with the 2022 bear market bottom, and then extended through the 2021 bull market peak and the recent all-time high, reveals a potentially worrisome scenario.

In 2021, the Nasdaq's peak coincided precisely with this upper parallel trendline, followed by a 30% decline to the lower trendline. This historical precedent raises the possibility of a similar correction, potentially targeting the 14,000 level on the Nasdaq.

While past performance is not a guarantee of future results, market history often rhymes. This technical alignment suggests a higher degree of downside risk for the Nasdaq compared to the potential upside.