Market Divergences Similar to 2007 in Nasdaq 100 Generate Technical Indicators that Point to a Potential Bear Market

A Rare Market Phenomenon in 2024: Insights from Nasdaq 100 Performance

The Nasdaq 100's performance in 2024 (YTD) has highlighted a fascinating market divergence. For only the second time since 1985, the index is up over 10% for the year while the day session (regular trading hours) has posted negative returns. The last instance? 2007, when the Nasdaq 100 gained 18.01% on the year.

Nasdaq 100 Index Annual Returns and Day Session vs Night Session Trends

2024 Market Snapshot:

• Nasdaq 100 Annual Return (YTD): +25.58%

• Day Session Return: -0.70%

• Night Session Return: +26.28%

This divergence raises an important question: Does the concentration of returns during the less liquid night session signal a potential bearish divergence, similar to 2007, before the Great Financial Crisis?

Historical Context:

• 2004–2006: The last three consecutive years before 2007 where day session returns were negative, but annual returns remained positive (albeit under 10%).

• 2007: Marked a pivotal year, with a +18.01% annual return but negative day session performance—a pattern mirrored today.

• 2014: The only year where the Nasdaq 100 gained more than 15%, with day session returns positive but contributing less than 5%.

  
  

From 2004–2007, the Nasdaq 100's cumulative return reached 35.16% before the 2008 bear market wiped out gains. This year's return of 25.58% invites reflection: Could a similar pattern repeat?

Key Takeaways:

• The day session's underperformance in 2024 remains notable as one month of trading remains in 2024.

• Will the day session turn positive in December, and if so, by how much?

• These patterns underscore the value of analyzing session-specific contributions to overall performance—especially in times of heightened volatility when using short term trading systems.