We have written on a number of occasions over the past few months that we believe the NASDAQ Composite will bottom at 9,000. By when? By March 2023.
That’s 7 months from now if you include March 2023. We need two things to happen in order for investors to capitulate:
- First, we needed the Fed to take a firm stance on inflation and for a majority of investors to believe the Fed. We believe this essentially happened last Friday in Jackson WY as a result of Fed Chair Powell’s 8 minute speech.
- Second, we need a majority of investors to believe thay the economy is in a recession. By March 2023 we will have had the September quarter and December quarter earnings reports which we believe will leave no room for doubt that the economy is weak and will manifest itself as such in the earnings reports.
- Interestingly, the trajectory of the NASDAQ Composite could look similar to the chart during the Great Recession when the NASDAQ lost 55% of its value from peak to trough.