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LivestreamMenuBTIG sees some bad news ahead for investors. If history is any guide, the investment bank says last Friday’s stock market rout is likely to be repeated. A violent sell-off in the chip sector last Friday drove down the Nasdaq Composite by 4.18%, the largest single-day decline for the technology-dominated index since April 2025. The exact catalyst for the pullback was hazy, although some investors pointed to disappointment in Broadcom ‘s failure to raise its AI chip outlook last week. In a Monday note, BTIG highlighted that Friday’s retreat was the 22nd time that the Nasdaq Composite has dropped 4% or more on a Friday in the last 30 years. Jonathan Krinsky, the firm’s chief market technician, noted that in 17 of the prior 21 occurrences, the index broke its Friday intraday low on the following Monday, and 19 times it broke the Friday low by the end of the next week. “Only twice did it take longer than a week, but in every case the low was tested eventually,” the technical analyst said. “As it stands now, NDX is re-testing its 20 [day moving average] (29,684) from below. This is often a spot to lighten up if you were feeling some pain on Friday. If history is any guide, when NDX loses -4% or more on a Friday there is a 90% chance that Friday low is breached in the next five trading days, and we don’t think this time is different.” Krinsky added that of the two exceptions where it took more than a week to breach the Friday low, both were well into the depths of a bear market, when stocks were quite oversold. “That’s the opposite of the current set-up,” he continued. “Regardless, the intraday low from a -4% NDX Friday has ALWAYS been tested at some point.” More positively, though, the average and median forward returns for the Nasdaq Composite have always been positive in the weeks following a Friday rout, BTIG said.Read More
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