The Nasdaq 100’s short-term rally may be overThe Nasdaq 100 has had a rough start to 2025, plunging by nearly 15% over the year so far. Even with the recent rally, the technology-heavy index remains down almost 9%, and where it goes from here appears less certain. Many investors seem to believe that a V-shaped “snapback rally” is due, but the technical pattern — resembling a broadening megaphone — suggests that the next major move could be sharply lower.
The Nasdaq has completed three touches on an upper trendline and two touches on a lower trendline — a classic megaphone pattern — suggesting the formation is now complete, and the next significant move in the index could be towards the lower trendline at 19,600. Should the NASDAQ fall below 19,600, it could potentially undercut the 10 March low at 19,115.
The Nasdaq’s move higher off the 11 March low could be corrective, with overlapping wave structures. The index is also rebounding from oversold levels after it fell below the lower Bollinger Band and its relative strength index dropped below 30. However, that condition has passed, and the index is no longer oversold. Furthermore, the Nasdaq has stalled over the past two days just below the 200-day moving average (DMA) — a key resistance level.
If the Nasdaq can rise above the 200-DMA and surpass the upper trendline, the megaphone pattern would be invalidated, with the potential for the index to target the upper Bollinger Band at 20,900.
Written by Michael J Kramer, founder of Mott Capital Management
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