Nasdaq Year-End Playbook Decode 5-Year Correlations and Seasonal Q4

Group 1 - The Nasdaq is experiencing multi-year strength due to factors such as ongoing interest rate cuts by the Federal Reserve, which make borrowing cheaper and encourage corporate investment and consumer spending [1] - AI enthusiasm is driving earnings growth and significant investments in major tech companies, contributing to the Nasdaq's performance [1] - Strong consumer spending, supported by a solid economy and the holiday season, along with continued corporate earnings expansion in the tech sector, provides a solid foundation for Nasdaq gains heading into the new year [1] Group 2 - Potential headwinds for the Nasdaq rally include high valuations in tech stocks, which may be vulnerable if growth does not meet expectations [2] - Economic uncertainties such as potential trade tensions, new tariffs, or a cooling labor market could pose risks to the Nasdaq [2] - The Nasdaq's heavy reliance on a few mega-cap tech companies creates concentration risk, where any issues with these leaders could lead to broader market volatility [2] Group 3 - The Nasdaq is up 54% year-to-date, following a 26% return in 2024, and has rallied about 59% since April 2025 with minimal corrections [4] - The 50-day simple moving average (SMA) has supported the April rally, with only five retests, indicating a strong upward trend [4] - Despite concerns of overextension and potential corrections, the Nasdaq has continued to defy predictions of downturns, showing little sign of reversing its trend [4] Group 4 - The December Nasdaq futures contract will soon roll over to the March contract, with significant historical correlations observed in previous years [6] - The correlation percentages for years such as 1997, 2010, 2014, 2018, and 2021 are all above 87%, indicating a strong historical trend [6] - Current correlation trends show a steady uptrend into year-end, providing a potential roadmap for future market behavior [6]