Big bearmarket on NQ1! I assume the market is going down ca. 5%The Nasdaq (NQ) is a highly liquidity-driven market, dominated by technology stocks that react strongly to interest rates, monetary policy, and institutional positioning. Price movements are often not driven by news itself, but by where liquidity is resting.
Markets tend to move toward obvious highs and lows because that is where stop orders and resting liquidity accumulate. When the Nasdaq trades above prior highs, it often triggers buy-side liquidity, such as stop losses from short sellers and breakout buyers. Once this liquidity is absorbed by larger players, buying pressure can quickly weaken, creating conditions for a reversal lower.
Another key factor is institutional distribution. During extended rallies, smart money often sells into strength while retail traders continue to buy. This distribution typically occurs near range highs, equal highs, or premium price zones, where liquidity is highest. After distribution is complete, price no longer has the support needed to continue higher.
From a liquidity perspective, a decline in NQ is likely when buy-side liquidity above highs has been taken, price fails to hold above key resistance, market structure shifts from higher highs to lower highs, and sell-side liquidity below recent lows becomes the next target.
In such scenarios, the market seeks sell-side liquidity below previous lows, value areas, or unfilled inefficiencies. This downward move is not random but a natural rebalancing process, allowing institutions to enter or re-accumulate at lower, more favorable prices.
In summary, the Nasdaq falls not because of fear or headlines, but because liquidity has already been collected on the upside, and price must move lower to find new liquidity and restore balance.
