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Nasdaq Sinks Into Death Cross After 16% Drop From November Peak

  • Pattern appears when an index’s 50-DMA falls below its 200-DMA
  • Death cross can presage drops, but often a trailing indicator
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The Nasdaq Composite Index tumbled into an ominous “death cross” technical formation Friday for the first time since April 2020, when the pandemic battered the global economy and U.S. equity markets swooned.

Following Friday’s 1.2% decline, the index has now shed 16% since touching a record high on Nov. 19. The pattern, which is used by some investors to assess longer-term trends, has at times presaged further weakness. It appears when an index’s short-term 50-day moving average crosses below its longer-term 200-day moving average.