Many analysts are expecting a pullback in the Nasdaq. The figure of 5-10% often gets passed around. The main issue that makes it tricky is, of course, the timing of any pullback. One of the obvious times that the Nasdaq is vulnerable to a possible pullback is with the next Fed meeting. So, it is worth noting that the first part of November has seen some falls over the last 10 years.

Over the last 15 years, the Nasdaq has fallen 07 times between November 01 and November 20. The average loss was -1.60%. The largest gain was +7.41% and the largest loss was -22.34% in 2008. There is never any guarantee that this seasonal pattern will repeat its gain this year. However, it is very helpful to notice when these strong seasonal patterns are in place.

Major Trade Risks:

  • The main risk to this trade is if the Fed are more dovish than the market is expecting which could cause stocks to have another leg higher.
  • Further COVID-19 breakouts could also result in more demand for tech stocks which would benefit the tech-dominated Nasdaq.