The rise of the Nasdaq Composite Index on Monday after falling within a day of nearly 5% was only the sixth time this century that such a movement has occurred on such a scale. Each case led to a rather sharp recovery within the prevailing downward trend.
Trade data analyzed by Bloomberg shows that in the other five sessions since 2000, when the Nasdaq Composite closed on the green after reversing a decline of more than 4%, the decline stagnated and followed a sharp rise in a few days to a few weeks . .
Monday’s trade session in the United States “has a sense of short-term capitulation,” said Thomas J. Hayes, chairman of Great Hill Capital in New York, in comments by email. The key signals for “the tradable bottom to be confirmed” will come from the profits of technology companies and some market-oriented guidelines of the Federal Reserve to reduce the balance, he said.
The first two cases of recovery during the same session of more than 4% came in the midst of the dotcom bubble from 2000 to 2002. The next two occurred around the Great Recession from 2007 to 2009. The most recent event before Monday occurred during of the so-called correction from 2015 to 2016, according to Bloomberg data.
The technical indicators that all cases share – in addition to the significant recovery during the day – include a daily index of relative strength reported below 30, a sword previous candle with closing below the opening of the day and a bullish candle on the signal day or Monday last case. The candle refers to the range of trade in a certain period.
Excluding the latest event, the Nasdaq Composite rose an average of 3.5% in five days – and the index was also higher in all five cases. The average profit after 20 days expanded to 5.2%, with the benchmark higher in four out of five cases.

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