That was one heck of a reversal today in tech stocks. At one point the Nasdaq-100 was up more than 2%, but it gave up all of those gains and then some, finishing the day down over 2%.
After a 60% move off the March lows, the question on many investor’s minds tonight is, “was that the top?”
This type of reversal is rare and is only seen in volatile markets. It happened at the bottom in March 2020, and before that you’d have to go all the way back to the bottom of March 2009.
It’s happened at the bottom, but it also happened near the top. Tech stocks did this type of thing in March 2000, right as the tech bubble was making its final ascent.
So, was that the top?
We can only know with the benefit of hindsight, so a better question investors should ask is, “am I okay if it was and am I okay if it wasn’t?”
If the market does tumble 20% or more, will I be able to sleep at night? If the market races 20% higher, am I exposed enough so that I won’t feel the fear of missing out?
Being able to answer these questions is more important than trying to know the unknown.