The Nasdaq 100 index plunged 13% from its all-time highs set on Feb. 18, 2025, and now sits 4% below its 200-day moving average, a critical technical threshold that has historically signaled major buying opportunities.
The sharp sell-off in big tech stocks has been fueled by mounting concerns over higher tariffs, slowing economic growth and sticky inflation, a combination that has spooked investors and led to aggressive de-risking.
The Atlanta Fed’s GDPNow model is forecasting a 2.4% economic contraction in the first quarter of 2025, a sharp reversal from its 2.3% growth estimate in mid-February.
Meanwhile, Goldman Sachs recently cut its 2025 U.S. GDP forecast from 2.4% to 1.7%, citing expectations of significantly higher tariffs.
Ed Yardeni, president of Yardeni Research, says the market may have already entered a deeper downturn.
“We can’t rule out that a bear market started on February 20. The risk now is that if the sell-off continues, the negative wealth effect will increase the odds of a recession, which would widen the federal budget deficit and increase the debt-to-GDP ratio,” he said.
Not all analysts are pessimistic. Larry Tantarelli, chief technical strategist for Blue Chip Daily Trend Report, sees the potential for a sharp rebound.
“This remains a very news-driven and highly volatile market. If there are any positive news catalysts, especially with regards to tariffs, then (NDX) could stage a sharp reversal,” he said.
Chart: Benzinga Pro
The 200-day moving average is one of the most widely followed technical indicators in financial markets.
It represents the average closing price over the last 200 trading days and is often viewed as a dividing line between long-term bullish and bearish trends.
Legendary investor Paul Tudor Jones once said, “My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: ‘How do I keep from losing everything?’ If you use the 200-day moving average rule, then you get out. You play defense, and you get out.”
When the Nasdaq 100, which is tracked by Invesco QQQ Trust QQQ, falls below this level it signals weakness, but historically, it has also provided strong buying opportunities.
Historically, the Nasdaq 100 has bounced back strongly after falling below its 200-day moving average.
In four of the last five instances, the index posted double-digit gains over the following months.
The average three-month return across these instances is 11%, while the one-year return averages 29.4%, indicating that investors who bought during these breakdowns were often rewarded over time.
The exception was in 2022, when macroeconomic uncertainty and aggressive Fed tightening led to further losses, marking a prolonged bear market in tech stocks.
| Date | 1-Month Forward | 3-Month Forward | 6-Month Forward | 1-Year Forward |
|---|---|---|---|---|
| March 10, 2023 | +10.1% | +22.3% | +29.9% | +51.9% |
| Jan. 22, 2022 | -6.4% | -6.0% | -17.8% | -22.2% |
| March 9, 2020 | +5.7% | +24.4% | +39.3% | +61.1% |
| June 3, 2019 | +12.8% | +8.4% | +19.2% | +35.0% |
| March 7, 2019 | +8.4% | +10.9% | +8.1% | +21.3% |
| Average | +6.1% | +11.0% | +15.7% | +29.4% |
The Nasdaq 100’s decline below its 200-day moving average could mark a major buying opportunity, but investors should carefully assess the broader macroeconomic picture.
On one hand, history suggests market rebounds following similar declines have been strong, with double-digit returns in most cases.
On the other hand, risks remain elevated, including escalating tariffs, slowing economic growth, and uncertainty over the Federal Reserve’s rate path.
For now, the next major catalyst will be February’s inflation report.
If upcoming Consumer Price Index numbers come in softer than expected, it could fuel optimism about potential rate cuts, sparking a relief rally. But if inflation remains stubbornly high, the market’s downward trend could deepen.
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