Dear Reader,
The Nasdaq Composite briefly entered into correction territory on Friday, or a decrease of more than 10 % from its recent peak.
How more has the Nasdaq Composite to fall?
I forecast the Nasdaq Composite will fall more than 22 % from its recent peak. Then, technology stocks, especially the one with larger market capitalization will start to look slightly undervalued.
Mind you, if the Nasdaq Composite falls by 25 %, single technology stocks, especially the hot mid capitalization ones could fall 30 % or 40 %.
It seems that technology stocks options investing by large funds, Softbank, and retail investors drove banks to buy technology stocks to hedge the technology stocks options they have written. This frantic buying, of course, fueled the recent technology stocks rally to crazy levels. So it is now time for a bear market in technology.
Value stocks will lose less value than technology stocks, this time around. And banks will realize large mark to market losses on their technology stocks holdings. If the coronavirus epidemic continues unabated, the fall in the main indices may not end up arrested at 20 % - 30 % and DJIA, S&P 500 and the Nasdaq Composite could crash more than 40%.
However, my bet is that the Nasdaq Composite will decline 25 % from its recent peak, while DJIA and S&P 500 could lose around 15 % -17 % of their value in the space of 1-2 months. Then the US stock market indices will slowly start to recover.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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