Nasdaq plummets and Wall Street loses trillions: what to expect from Nasdaq next week

Wall Street lost trillions of dollars in market value. The Nasdaq faced a sharp wave of selling. Artificial intelligence giants suffered significant declines. And, as investors tried to understand what was happening, one question began to dominate discussions:

Is the worst over or are we just at the beginning of a deeper correction?

Speak up, gang!

What a week it was, huh?

If you've been following the American market in the last few days, you know exactly what I'm talking about. We had politics, technology, artificial intelligence, expectations about interest rates and a lot of volatility.

And do you know what caught my attention the most? It wasn't just the intensity of the falls. It was the speed with which investor sentiment changed.

In just a few days, we saw the market go from an environment of expectation to a strong concern about the future of technology companies. And here there is an important lesson.

The market can change direction much faster than you can change your mind.

Therefore, today I want to talk to you about the main events of the week, what they mean for Nasdaq and how we can prepare for the next trading sessions.

1. Why did the Nasdaq fall this week?

Let's start with what caught Wall Street's attention the most.

The Nasdaq, an index that concentrates many of the largest technology companies in the United States, faced strong selling pressure.

On Thursday, November 5th, the index registered a significant drop, close to 5.5%, according to the numbers that dominated market analyzes throughout the week. The movement was accompanied by important losses in companies linked to artificial intelligence and semiconductors.

But why did this happen? Because the market began to reevaluate a combination of factors.

On the one hand, we have technology companies trading with high growth expectations. On the other, investors are concerned about the volume of money needed to support the expansion of artificial intelligence. And there is still the American political and economic environment, which directly influences the confidence of those who invest.

Class, pay attention to one thing.

A company can continue to be excellent and, even so, its shares can suffer a brutal drop.

This happens because the price of a share does not just represent the company's current performance. It also reflects what investors expect to happen in the future. When these expectations change, prices can react quickly.

And it was exactly this type of movement that put Wall Street on alert. I had already talked about this risk in the column [Nasdaq on alert after the strong fall](/n/nasdaq-alert-after-strong-fall-greater-risk-may).

2. Wall Street lost trillions. But where did that money go?

This was one of the most impactful headlines of the week. Trillions of dollars in market value disappeared during the sharp sell-off on American stock markets.

But there is a detail that many people don't understand. When we say that Wall Street lost trillions, we are not saying that all that money physically left the companies. We are talking about a reduction in the market value of shares.

I will explain it in a simple way. Imagine a company that has its shares traded at a certain price. If the market starts selling these shares and the price drops, the total value attributed to the company also decreases.

Now imagine this happening simultaneously to some of the biggest companies on the planet. The result could represent trillions of dollars in reduced market value.

And do you know why this matters? Because movements of this magnitude can change investor behavior.

Funds reevaluate positions. Managers adjust their portfolios. Investors seek to reduce risks. And these decisions can generate new waves of volatility.

The problem is not just the size of the fall. This is the effect it can have on the decisions of those who move billions of dollars.

3. Is artificial intelligence in a bubble?

This is perhaps one of the most important questions of the moment.

Over the past few years, artificial intelligence has become one of the main drivers of appreciation in the American market. Companies began investing billions in processors, servers, data centers and technological infrastructure. Nvidia has become one of the great symbols of this revolution.

But now Wall Street is asking a different question.

When will all this investment turn into enough profit to justify expectations?

Class, this is fundamental. There is a huge difference between believing in the future of a technology and believing that any price paid for a stock linked to that technology makes sense.

The internet has transformed the world. But that didn't stop many technology companies from facing deep declines during the dot-com bubble burst of the early 2000s.

Does this mean we are living in exactly the same situation? No. The companies, business models and financial conditions are different. But history teaches us that exaggerated expectations can make markets more vulnerable to corrections.

And what we saw this week was precisely an increase in doubts about the pace and profitability of investments in artificial intelligence.

Artificial intelligence can continue to revolutionize the economy, even if some stocks are going through a difficult period.

One thing does not cancel out the other.

4. What happened to Nvidia and why does it worry Nasdaq?

Nvidia was in the spotlight. The company, which supplies chips used in advanced artificial intelligence applications, suffered strong selling pressure during the week.

And this deserves special attention. Nvidia is not just an important company for the technology sector. It has also become a reference for investors following the expansion of artificial intelligence. When its shares show significant movements, other companies in the sector may be affected by the same feeling.

But there is another event that is already on Wall Street's radar.

Nvidia's next [balance sheet is scheduled for November 17th](/n/balanco-nvidia-17-november-11-days-resultado).

And this result could help investors assess whether demand for artificial intelligence infrastructure continues to grow at the expected pace. The market will be paying attention to revenue, profit margins and, mainly, the company's projections for the coming quarters.

Because it’s not enough to present high numbers. It is necessary to understand whether these results are sufficient to meet expectations.

And here's a warning for those who operate the Nasdaq.

You can get a company's results right and completely get the market's reaction wrong.

Therefore, be careful with operations based solely on the expectation that a company will present a positive balance sheet. The market doesn't work that simply.

5. The American elections also affected Wall Street

Another important topic of the week was the political scenario in the United States.

The Democrats' advance in the midterm elections brought new discussions about economic policies, regulation and the future of investments in technology.

And this reinforces something I've been saying for a long time.

The market does not vote. The market reacts!

An election can change expectations about taxes, public spending, business rules and economic decisions. But the market does not necessarily react according to each investor's political preference. It tries to assess how these changes could affect business and the economy.

And this reaction does not always happen predictably. News initially received positively can lose strength when investors begin to analyze its possible developments.

Therefore, be careful with the attempt to transform political opinion into operational strategy. When trading, what matters is understanding the price behavior, the economic context and the risks involved.

6. Payroll, American interest and Federal Reserve: why is everything connected?

Friday also brought renewed attention to U.S. economic indicators. The market followed data related to American employment and its possible consequences for the decisions of the Federal Reserve, the central bank of the United States.

And here is a point that every trader needs to understand. When the American economy shows strength, it can be interpreted in different ways.

On the one hand, a buoyant job market may indicate that companies continue to hire and that economic activity remains resilient. On the other hand, it could also fuel concerns that inflation will take longer to recede.

And if inflation remains under pressure, the Federal Reserve may have less room to cut interest rates.

But why does this affect the Nasdaq? Because interest rates influence the cost of money and the valuation of companies. Especially those that depend on long-term growth expectations.

Interest, inflation, employment and technology are part of the same conversation within the financial market.

And that's why following only the chart, ignoring the economic calendar, can leave the trader unprepared for important movements.

7. Nasdaq tried to recover. Does this mean the worst is over?

After strong selling pressure, the market made an attempt to recover on Friday. And it was precisely at that moment that one of the situations that I consider most dangerous for beginner traders appeared.

The person sees a sequence of green candles after a significant drop. You start to believe that the market has found a bottom. And buy in before confirming whether there really is a change in the structure.

But, gang, a recovery doesn't necessarily mean that the trend has changed. The market may just be making a technical rebound. It may be correcting part of a previous movement. Or it may, in fact, be beginning a more consistent recovery.

How to differentiate these situations? There is no infallible answer. But we need to look at the price structure, buyer participation, volume and relevant technical regions.

The mistake is not looking for opportunities after a fall. It's believing that every fall represents an opportunity.

And that makes all the difference.

8. How could the fall of Wall Street affect Brazilians' pockets?

Now I want to talk to anyone who is reading this column and thinks: "Estéfano, I don't trade the Nasdaq. What does all this have to do with me?"

Class, there's a lot more to it than you think. The financial market is global.

When international investors become more concerned about risk, they may reduce positions in emerging markets, including Brazil. Depending on economic conditions, this movement could put pressure on the real and favor an appreciation of the dollar.

And when the dollar rises, some costs may increase: imported products, electronics, international travel and inputs used by Brazilian companies.

Furthermore, anyone who invests in international funds, ETFs or American stocks can directly feel the volatility in their assets.

Mas atenção. This does not mean that every drop in the Nasdaq will cause a rise in the dollar or automatically increase prices in Brazil. There are many factors involved. What we need to understand is that markets are connected.

What happens on Wall Street may be much closer to your pocket than you think.

Therefore, following the American market is also a way to expand your financial education.

9. What does the Confirmation Clock teach in weeks like these?

After more than ten years of operating the Nasdaq, one thing has become very clear to me. The market does not require you to get every move right. But it requires you to respect the risks of each decision.

It was from this experience, my studies and observation of methodologies used by international traders that I developed the Confirmation Clock, a technique that seeks to organize market reading and establish criteria for possible entries.

In one of the configurations we use, we observe the alignment between three graphic times: 5 minutes, 2 minutes and 1 minute.

On the five-minute chart, we try to understand the structure of the movement. On the two-minute chart, we follow the price behavior within this context. And on the one-minute chart, we look for the specific confirmation conditions.

We also look at volume strength and the relationship between current movement and important technical regions.

But I want to reinforce one thing. No methodology eliminates risk. No indicator guarantees results. And no trader can predict the next market movement with certainty.

The objective is to work with more discipline and objective criteria. Because, in weeks like this, emotion can become the trader's biggest enemy.

10. What to expect from Nasdaq next week?

After such an intense week, the market enters a new period of observation. And there are some important questions we need to follow up on.

Will the recovery of technology companies continue? Will investors continue to reduce exposure to sectors linked to artificial intelligence? How will the market react to the next economic indicators? And will the Nasdaq be able to build a more consistent recovery or will it retest support regions?

Another important point will be the preparation for Nvidia's balance sheet, scheduled for November 17th. The disclosure could bring new information about the demand for chips and the pace of expansion of investments in artificial intelligence.

But there is something that I consider even more important.

We don't need to find out today what the Nasdaq is going to do next week. We need to be prepared for different scenarios.

If the market rises, we will watch for confirmation conditions. Se cair, também. And if it doesn't present an opportunity compatible with our strategy, we simply don't need to operate.

Preserving capital is also a professional decision.

The biggest lesson of the week: the market does not reward haste

Class, I want to end our conversation with a reflection.

This week, we saw Wall Street lose trillions in market value. We saw technology giants suffer significant declines. We have seen American politics influence expectations. We saw artificial intelligence return to the center of concerns. And we saw the Nasdaq try to react after a sharp sell-off. All this in a few days.

But you know what hasn't changed? The importance of discipline.

The market will continue to offer opportunities. Some will be excellent. Others will seem great, but they can turn into traps. And the trader needs to learn to recognize this difference.

The market doesn't care what you think. He will make his move. It is your responsibility to decide how you will react.

So don't be in a rush to get in. Do not trade to recover a loss. Don't increase your exposure just because you believe the market needs to rise again.

Respect your strategy. Respect your risk management. And remember:

The market will be open again next week. The most important thing is to preserve the conditions to continue participating in it.

Now I want to know your opinion. After everything that happened this week, do you believe that the Nasdaq is starting to recover or that we will still see further declines? Leave your comment and share this column with someone who follows the financial market.

An excellent weekend for you and your family! May God bless everyone.

Next week we will be together again, following the American market with information, strategy and a lot of discipline.

A big hug, class!

Estéfano Santos, trader in the American market for over 10 years and creator of the Confirmation Clock methodology.

Transparency: Estéfano Santos is the founder of X-Trader Academy, which teaches the Confirmation Clock. This column is exclusively informative and educational in nature and does not constitute investment advice. Trading in stocks and futures contracts involves significant risks, including the possibility of financial loss.

Automatically translated from Portuguese.