The NASDAQ index is experiencing a downturn, currently down 347 points or 1.60%, falling below its 100-hour moving average at 21,331.91. This breach shifts the short-term trend to the downside, heightening concerns about potential further selling.
Historically, a similar break below the 100-hour average on August 1 led to a decline towards the 200-hour moving average, which now stands at 21,119.99. Breaking under this next level could increase the negative bias, suggesting further downward momentum.
Market Observations
Market participants are keenly observing whether the index will close back above the 100-hour moving average or continue to lean towards the 200-hour moving average in the upcoming sessions. Attention is also on the Jackson Hole Summit, where Fed Chair Powell will discuss policy outlook, affecting market sentiment.
Technically, the 200-hour moving average is the initial critical support. Further decline could lead to the 38.2% retracement level at 20,864.09 and eventually to the 50% midpoint near 20,573.83. Reaching these levels would represent a drop of around 4.25% from the August 12 peak, indicating potential for more extensive corrective action if selling persists.
With the NASDAQ breaking below its 100-hour moving average, we see a clear warning sign. This shifts the immediate trend to a more bearish outlook. The key for us is whether sellers can hold the price below 21,331 into the close.
This move is backed by rising market fear. The VIX, a measure of expected volatility, has jumped over 25% this week to 19.5, signaling growing anxiety among traders. This is the kind of environment where downward moves can accelerate quickly.
Trading Strategy Insights
We are now watching the 200-hour moving average at 21,119.99 as the next major support. Looking back to the start of the month on August 1, 2025, we saw a similar break lead directly to a test of this level. History suggests this is the most likely next target for sellers.
For those trading options, this is a moment to consider protective puts on indices like the QQQ. The CBOE put/call ratio has already climbed to 1.15, showing that more traders are buying puts than calls in anticipation of further declines. This defensive positioning is becoming a popular strategy.
All eyes are on Fed Chair Powell’s speech at the Jackson Hole Summit this Friday. Market pricing, according to the CME FedWatch Tool, shows an 83% probability of a rate cut at the next meeting. However, with the latest CPI report coming in hotter than expected at 3.4%, any hawkish language from Powell could easily spook the market.
Given the binary risk of the speech, strategies that benefit from volatility, such as a long straddle, could be effective. This allows a trader to profit from a large price swing in either direction following Powell’s remarks. The uncertainty makes picking a direction ahead of Friday a risky bet.
If the 200-hour moving average fails to hold, our next focus will be the support zone near 20,864. A deeper slide could take us toward the 20,573 level, which would represent a 4.25% correction from the highs we saw on August 12. These are the key levels to plan trades around.
We also have to consider the seasonal headwinds approaching. Historically, September is the weakest month of the year for stocks, a pattern often called the “September Effect.” This historical tendency adds weight to the current bearish technical signals we are seeing.
