Nasdaq manages small bounce but more losses likely

Along with European markets, Nasdaq futures have managed a small bounce during early European trade, although at the time of writing they were still holding near Tuesday's lows along with tech stocks in extended hours trading, after the index's biggest plunge since the pandemic.

After such a big decline, dip buyers will likely be very nimble today. This means any bounces that we might see today may not hold for very long. With the market repricing interest rate hikes from the Fed, there will likely be more pain for investors than gains. Look out below.

After the Nasdaq's big bearish engulfing candle, I would expect to see some further downside follow through. Many longs are still trapped and their stops are in danger of getting triggered. At this stage, I wouldn't rule out a return to the summer lows, if we get past and hold below 11918 - the most recent low.

The bulls have a lot of wood to chop. While a short-term bounce from severely oversold levels makes sense, I would now wait to see a clear reversal pattern before looking for bullish setups. It is clear that the biggest moves have been to the downside all year. This is because we are in a bear trend. As always, it is better to trade in the direction of the trend.

By Fawad Razaqzada on behalf of