The Nasdaq pushed to new record highs in late May but hit a wall in early June, declining 5% over the past week alone and flipping a large gain to a 2% decline over the past month. Friday was the worst single day in over a year. The Nasdaq is still up 10.5% year-to-date, but has given back considerable gains.

The chart shows the powerful bounce off support in late March. The rally quickly pushed the index into overbought territory in May, before the pullback in recent days. The index is still trading above all key EMAs, and the RSI at 45 still has room to continue dropping until it hits oversold levels around 30.

Last month I forecasted that the index would likely come down to test support around 23,000 to 23,500. I still hold this view, implying another 10% downside is possible. This would line up with a drop to the 200-day EMA and oversold RSI.

Continued enthusiasm for artificial intelligence, data centers, and semiconductors, along with strong earnings from mega-cap tech names, powered the May rally. The May jobs report (released June 5) showed +172k jobs added — far above the ~85k expected. This "good news is bad news" dynamic raised fears of persistent inflation, delayed Fed rate cuts, or even potential rate hikes. Weak guidance from names like Broadcom added to worries that AI capex might slow.

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Takeaway: The Nasdaq remains in a longer-term uptrend but is highly sensitive to interest rates and tech sentiment. I think we are likely to see another 5% to 10% of downside before a bottom is reached, sentiment is reset, and valuations can start moving higher again. But much will depend on developments with the Iran war and moves from the new Fed chief.