Nasdaq in Bear Market With 20% Drop, Dow Jones Worst Week Since 2008

The Nasdaq is in a bear market. On December 23, the Nasdaq Composite fell to a new yearly low at 6,332 points, as stocks and securities listed on the exchange plummeted in value.

A bear market is commonly referred to as a 20 percent drop from a market, index, or asset’s all-time high. Since its newly established all-time high on August 29 at 8,109 points, the Nasdaq Composite has fallen by nearly 22 percent to 6,332 points.

As technology stocks in the likes of Amazon and Cisco recorded a daily drop of 3 to 6 percent on the day, the Nasdaq Composite struggled to sustain any sort of momentum and dropped by 3 percent within a six-hour span.

Nasdaq in Trouble, What Investors Can Anticipate

The U.S. government and the Trump administration have attributed the poor performance of the U.S. stock market to the latest rate hike by the Federal Reserve.

The increase in the federal funds rate has made it more costly for businesses, especially small to medium businesses, to lend money from financial institutions, placing more pressure on the struggling economy of the U.S.

Jeff Kravetz, a regional investment director at U.S. Bank Wealth Management, said that the Fed believes the economy of the U.S. is still strong. But, the country’s central bank has failed to consider key variables that may affect the short-term prospect of the global economy including the tension between the U.S. and China over the long-lasting trade war and high tariffs.

“The Fed is making the case the economy is still good, but there’s so many things investors are worried about,” Kravetz said.

Although several analysts have claimed that the Fed cannot alter the rate purely based on the performance of the U.S. stock market, such an argument was relevant prior to decline in the Nasdaq Composite and the Dow Jones.

Both the Nasdaq Composite and the Dow Jones are up quite significantly from early 2017. However, with about a week of trading left before the year’s end, if the sell-pressure on the U.S. stock market continues to grow and it does not demonstrate signs of a drastic trend reversal, an additional drop in value can be expected throughout December and the first month of 2019.

UBS Global Wealth Management executive Jason Draho told the WSJ that investors in the stock market are refraining from initiating in any investment until the year’s end, and without buy volumes, the intensifying sell pressure could lead to a steeper sell-off for U.S. markets.

Draho said:

The fear of slowing growth and a bear market has become much more prominent. There’s not many buyers who want to step up and say they’re willing to buy today, and many are waiting for the new year.

Dow Jones Also Approaching Bear Market Territory

The Dow Jones has dropped by 16.3 percent from its all-time high at 26,828 points and is approaching bear market territory.

On the day, the Dow Jones recorded a 1.81 percent drop, ending the week as the market’s worst week since the 2008 financial crisis


Source
Author: Joseph Young
Image Credit

Bitcoin Price Continues to Bleed as Market Fails to Find a Bottom

The bitcoin price on Monday continued its crash course despite showing gains during the early Asian trading session. The digital currency attempted a go at its yearly low at ~$3,455 after reversing from its intraday peak at $4,115. That overall marked a circa 14 percent crash, setting standards for a further bearish action.

The BTC/USD index at press time is trading at 3581-fiat, eyeing potential support from 3508-fiat. The market has once again created a psychological bottom area inside a 3000-to-3500-fiat range. There is so far no evidence that could prove a potential [strong] reversal at any of these levels. The last time BTC/USD tested these levels as support was in September 2017. The technical dynamics were different then — the pair was trending above its 50-period, 100-period, and 200-period simple moving averages while forming higher highs.

BITCOIN 1D CHART | SOURCE: TRADINGVIEW.COM, COINBASE

In November 2018, however, the technicalities have turned upside down. The bitcoin price is now trending below its key moving averages, forming lower lows. The question remains whether the levels that were strong supports during an uptrend should remain equally robust when the asset is on its way down.

Fundamentals are the Only Savior

The bitcoin technical indicators in the present could serve the purpose to instruct traders about potential entry and exit positions. They won’t be able to provide any long-term prospects unless the market truly establishes a bottom and rebounds with strong volume. Analysts predicting bottoms could at most be patting their own backs for making a right “guess,” not a prediction based on market demand.

The fundamental aspects of bitcoin, meanwhile, continue to be strong owing to the impending launch of Bakkt, an ICE-backed crypto exchange, and the potential approval of a bitcoin ETF by the last quarter of 2019. These are among the only remaining factors that should keep the investors’ interest alive in a bleeding market.

BITCOIN 4H CHART | SOURCE: TRADINGVIEW.COM, COINBASE

For day traders, the chart above could be relevant. The BTC/USD rate is visibly inside a descending parallel channel (and a long-term falling wedge formation discussed in our previous analysis). We’ll stick to a parallel channel in this report to understand the near-term dynamics.

The bitcoin price could restest the channel support for a potential pullback towards 3500-fiat, an interim long target, followed by a run towards the channel resistance as the primary upside target. An intra-channel long position should be coupled with a stop loss target 4-pips below the entry position to safeguard the trade.

Similarly, there is a high probability that BTC/USD will reverse from the channel resistance, then attempt a breakout action towards 4374-fiat, the interim upside target. A short position towards 3508-fiat upon an uptrend reversal should promise some decent profits. Nevertheless, maintaining a stop loss order 4-pips above the entry position will reduce the overall risk from the trade.

Trade safely and try not to catch a falling knife.


Source
Author: Yashu Gola
Image Credit:  Charts from TradingView.