Today’s Chart of the Day was shared by John Roque of 22V Research (@daChartLife). The Nasdaq is in a bear market no matter how you define it. John reminds us that bear market rallies can be deceptive, seductive, and painful on the way down. The table shows the counter-trend rallies that occurred in the 2000-2002 bear market. The index dropped 80% during that period, however, it wasn't a straight line down. There were 15 rallies of 10% or more and 8 rallies of 20% or more. At this point, the Nasdaq could rally more than 16% and still be below a downward sloping 200-day moving average. We'll likely see a relief rally in the coming weeks, given how sharp the decline has been recently. However, these counter-trend rallies can't be trusted as long as the Nasdaq is in a downtrend.
