Former Treasury Secretary Mnuchin stated a 5% to 10% decline in stocks is a natural occurrence. Presently, the S&P index is down 10.37%, the NASDAQ index has fallen by 14.69%, and the Dow is down 9.5%.
The NASDAQ index is currently approaching its 38.2% retracement level from the upward movement since the October 2023 low. This level is set at 17,278.18 and corresponds to the lowest point observed since September 11, 2024, also below the 200-day moving average.
Market Declines And Their Implications
Mnuchin’s remark suggests that downturns of this scale are not irregular but rather part of the rhythm of the market. Put simply, declines within this range should not be viewed as out of the ordinary. However, with the S&P falling beyond 10%, the NASDAQ pulling back nearly 15%, and the Dow approaching similar territory, these figures indicate a trend that warrants attention.
The NASDAQ reaching the 38.2% retracement level is not just a number on a chart—it is a threshold that historically signals whether selling pressure will persist or if buyers will step in to stabilise prices. That level at 17,278.18 is not only a technical marker but also aligns with lows last reached in mid-September, reinforcing its role as a decisive point. The fact that it now sits beneath the 200-day moving average adds another layer of concern, as this long-term measure often reflects the broader trajectory of the market.
We note that such a setup can lead to one of two outcomes. If buyers fail to emerge with enough force to defend this level, further declines may follow swiftly. A clean break lower could draw in additional selling, particularly if automated trading models adjust positioning. On the other hand, if enough demand surfaces to hold this area, short-term traders may see opportunities to capitalise on a bounce.
Uncertain Trading Environment Ahead
With market sentiment already strained, trading conditions in the coming weeks may remain jumpy. Price movements could become less predictable, particularly around key support and resistance zones. There is no question that these levels will be closely monitored, as traders assess whether recent losses represent a temporary pullback—or something more prolonged.
