The financial markets experienced a dramatic rollercoaster last week, with a sharp sell-off on what has been dubbed "Blood Black Monday," followed by a notable rebound in the Nasdaq 100 ( $NASDAQ 100(NDX)$ ) and broader indices. As of March 16, 2025, the Nasdaq 100 Index closed at 19,704.64, marking a recovery of +479.15 or +2.49% from its recent lows, as depicted in the latest chart. This resurgence comes after a double-top formation and a subsequent break below the neckline at 19,706.64, raising questions about the market's stability. With the Trump administration settling into its early policy framework, positive economic data, and a dovish stance from the Federal Reserve, investors are left wondering: is the market on solid ground, or is this just a temporary respite?
The Technical Breakdown
The Nasdaq 100 chart reveals a classic double-top pattern, with peaks at 22,222.61 (February 7, 2025) and 22,270.44 (March 11, 2025), followed by a decline that breached the neckline at 19,706.64. This technical signal, confirmed by the price dropping to a low of 19,673.94, suggested a bearish reversal, with a theoretical downside target of approximately 18,198.15 (neckline minus the distance from peak to neckline, 22,222.61 - 19,706.64 = 2,515.97). The recent rebound to 19,704.64 indicates a potential stabilization, supported by technical indicators:
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Moving Averages: The price has fallen below short-term moving averages (MA5: 19,466.81, MA10: 19,899.46), but the proximity to the MA50 (21,131.95) suggests a possible support zone if the rebound holds.
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Bollinger Bands: The current price is near the lower band (18,785.39), signaling oversold conditions often preceding a bounce.
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RSI: The Relative Strength Index (RSI) at 37.910 (RSI3: 39.134) is nearing oversold territory (below 30), hinting at a potential reversal or consolidation phase.
However, the double-top formation’s validity is tempered by broader market dynamics. The sell-off, which began post-Trump’s inauguration on January 20, 2025, aligns with similar patterns in the S&P 500 and financial ETFs like XLF, suggesting a market-wide adjustment rather than an isolated Nasdaq 100 phenomenon.
Analyzing the S&P 500
The S&P 500 ( $S&P 500(.SPX)$ ), a broader barometer of U.S. equity performance, mirrors the Nasdaq 100’s recent volatility. As of March 16, 2025, the S&P 500 closed at 5,461.77, reflecting an 11% drop from its peak of 6,147.43 on February 7, 2025, following a double-top formation with a secondary peak at 6,146.15 on March 11, 2025. The neckline at 5,638.94 was breached, setting a theoretical downside target of 5,130.45 (5,638.94 - (6,147.43 - 5,638.94) = 5,130.45). The current price, just above this target, suggests the correction may be nearing its bottom.
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Technical Indicators: The S&P 500 has fallen below its short-term moving averages (MA5: 5,589.28, MA10: 5,692.56), with the MA50 at 5,942.65 as potential resistance if a recovery gains traction. The Bollinger Band lower limit at 5,469.22 is closely aligned with the current price, reinforcing oversold conditions. The RSI at 37.767 (RSI3: 38.844) further supports the likelihood of a near-term bounce.
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Market Context: The S&P 500’s decline reflects a broader market adjustment, influenced by the same post-inauguration uncertainty that impacted the Nasdaq 100. However, its 500 constituents, spanning multiple sectors (including financials, industrials, and technology), provide a diversified base that may stabilize faster than the tech-heavy Nasdaq 100. The recent rebound, coupled with positive sector performances, suggests a synchronized recovery effort.
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Implications: The S&P 500’s stability is critical for overall market confidence. A sustained hold above 5,400, with a potential retest of 5,638.94, could signal a broader bullish reversal. Conversely, a drop below 5,130.45 would indicate deeper concerns, though current data leans against this scenario.
Macro Drivers: A Positive Turn?
The rebound gains traction amid a confluence of positive developments:
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Trump Administration Policies: Since taking office, President Trump has signaled aggressive economic stimulus, including tax cuts and deregulation, particularly in the financial and energy sectors. The proposed relaxation of banking regulations could boost profitability for major constituents of both the S&P 500 and Nasdaq 100, such as financial technology firms and payment processors. While uncertainty initially sparked the "Blood Black Monday" sell-off, early indications of policy execution (e.g., infrastructure spending plans) have restored some investor confidence.
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Economic Data: Recent U.S. economic indicators paint an optimistic picture. January and February 2025 data showed robust job growth (non-farm payrolls exceeding 250,000) and a rebound in the manufacturing PMI to 52.3, signaling expansion. Consumer confidence, bolstered by anticipated tax relief, has also risen, supporting equity valuations.
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Federal Reserve Stance: The Fed’s March 18-19, 2025, meeting is widely expected to maintain a dovish posture. With core inflation projected at 2.8% (below the feared 3% threshold), the Fed may hold rates steady or signal a slower pace of tightening. This alleviates pressure on growth stocks within the Nasdaq 100 and value stocks in the S&P 500, such as Apple (AAPL), Nvidia (NVDA), and JPMorgan Chase (JPM), which saw gains of +1.82%, +2.91%, and +1.5% respectively on the rebound day.
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Market Sentiment: The futures market shows a discount of 37.14 points for the Nasdaq 100, but a +2.17% premium in futures suggests bullish overnight sentiment. The VIX has also eased from its Monday spike, indicating a cooling of panic, which bodes well for both indices.
Stability Assessment: Cautious Optimism
The market’s rebound after "Blood Black Monday" is encouraging, but stability remains uncertain. The double-top breaks in the Nasdaq 100, S&P 500 reflect a broader correction triggered by post-inauguration jitters. However, the current rally suggests that the worst may be priced in, driven by supportive macro conditions.
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Short-Term Stability: The oversold RSI and proximity to the lower Bollinger Bands in both the Nasdaq 100 (18,785.39) and S&P 500 (5,469.22) suggest consolidation between 19,500-19,800 for the Nasdaq 100 and 5,400-5,638.94 for the S&P 500. A break above their respective necklines (19,706.64 and 5,638.94) would invalidate the double-tops, signaling a potential resumption of the uptrend toward 20,500 (Nasdaq) and 5,900 (S&P 500). A drop below 19,500 or 5,400 could test the 18,198.15 and 5,130.45 targets, though this seems less likely given the positive backdrop.
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Long-Term Outlook: The Trump administration’s pro-growth policies, combined with a stable economic foundation and a Fed pause, provide a tailwind for both the technology-heavy Nasdaq 100 and the diversified S&P 500. Major constituents like Microsoft, Amazon, and JPMorgan Chase are poised to benefit from AI innovation, cloud computing demand, and improved banking profitability, potentially driving both indices toward their previous highs by mid-2025.
Risks to Watch
Despite the optimism, risks linger. Trade policy uncertainties (e.g., potential tariffs) could reignite volatility, particularly for global firms in both indices. An unexpected Fed rate hike or disappointing Q1 2025 earnings from tech giants and financials (due in April) could derail the rebound. Additionally, the synchronized correction across indices suggests systemic factors at play, necessitating vigilance.
Conclusion: A Stabilizing Market with Room for Growth
The rebound in the Nasdaq 100 and S&P 500 after "Blood Black Monday" reflects a market digesting initial post-Trump inauguration fears and pivoting toward optimism fueled by policy support, economic resilience, and a dovish Fed. While the double-top formations raise caution, the technical setups and macro environment suggest a stabilizing trend rather than a sustained collapse. The S&P 500’s broader diversification and the Nasdaq 100’s tech resilience provide a balanced foundation for recovery. Investors should monitor key levels (19,500 and 5,400 support, 19,706.64 and 5,638.94 resistance) and upcoming earnings, but the current data points to a market regaining its footing. For now, the bulls appear to have the upper hand—provided the policy and economic tailwinds hold.
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