# “Buy the Dip” May Stop Working...  Is a 20% Crash Coming Next? w/ Chris Vermeulen Source: https://www.youtube.com/watch?v=kXU8QBy_7sE Recap page: https://rapidrecap.app/video/kXU8QBy_7sE Generated: 2026-03-01T14:03:52.923+00:00 --- ## Quick Overview Chris Vermeulen suggests that the current market environment, particularly the weakness in the Nasdaq (NQ) and the Magnificent Seven ETF (MAGS), resembles the setup before the April 2020 COVID-related sell-off, indicating that a significant multi-year recession and sharp decline, potentially 20% or more, could be coming, especially if key support levels break. **Key Points:** - The Nasdaq 100 (NQ) is showing more weakness than the S&P 500, having broken below its 50-day and 150-day moving averages, signaling a short-term downtrend. - The MAGS (Roundhill Magnificent Seven ETF) chart shows a topping pattern resembling a head-and-shoulders formation, suggesting a significant reversal similar to the March 2020 COVID-19 crash is possible. - Vermeulen predicts that if the current support on MAGS breaks, the index could fall sharply, potentially down 20% or more, leading to a multi-year recessionary cycle. - The market decline is being led by US Tech/Software stocks (like the MAGS components), which are now moving down sharply after previously leading the market up. - Gold (GC) shows continued strength, having recently broken out to new highs, suggesting investors are seeking safety or that global economic uncertainty is rising. - Vermeulen's strategy is to follow the trend until it proves wrong, rather than trying to predict bottoms, and he will wait for a clear sell signal before changing his long positions. - The current market action, with the MAGS leading down, is distinct from the April 2020 tariff correction comparison, where retail stepped in to buy the dip, suggesting the current environment is different and more severe. ![Screenshot at 00:28: Chris Vermeulen points to the S&P 500 daily chart showing the index taking a 'big breather' while still technically in a rising trend, contrasting with the increasing weakness seen in the Nasdaq.](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-00-28.jpg) **Context:** Chris Vermeulen, Chief Investment Officer at TheTechnicalTraders.com, joins John Gillen on Milk Road Macro to discuss the current state of the equity markets, focusing heavily on the technical indicators for the Nasdaq 100 futures (NQ) and the MAGS ETF, which tracks the Magnificent Seven stocks. Vermeulen uses historical chart comparisons, specifically contrasting the current setup with the sharp sell-off in early 2020 due to COVID-19, to project potential downside risks for technology-heavy indices. ## Detailed Analysis Chris Vermeulen argues that the market is showing signs of weakness, particularly in technology-heavy indices like the Nasdaq (NQ) and the MAGS ETF (Magnificent Seven). He notes that the NQ is already in a short-term downtrend, having broken below its 20-day and 50-day moving averages, while the S&P 500 is only taking a 'big breather' within a larger uptrend. The MAGS chart is particularly concerning as it displays a topping pattern resembling multiple heads and shoulders, which historically precedes major downturns. Vermeulen draws a direct comparison between the current setup and the sharp decline that occurred during the COVID-19 market crash in April 2020, suggesting the current pattern implies a potentially severe sell-off, perhaps 20% or more, leading to a multi-year recessionary environment. He emphasizes that he does not try to call tops or bottoms but follows the trend; a break below key support levels will confirm the shift. Conversely, Gold (GC) is showing significant strength, hitting new highs, indicating a flight to safety or growing global uncertainty. Vermeulen contrasts the current action with the April 2020 event, where retail investors bought the dip aggressively, noting that this time, the market sentiment surrounding large-cap tech might be changing faster, potentially leading to a quicker unwinding of positions and a significant drop in other related indices if the Nasdaq breaks its key support. ### S&P 500 (ES#F, D) Analysis - Market taking a big breather, but the underlying trend remains technically rising based on 50-day and 200-day moving averages (00:25-00:27) - Vermeulen follows price action and waits for a confirmed trend change before altering positions (00:34-00:37) - A break below the 200-day moving average would signal a downtrend (01:04-01:07) ### Nasdaq 100 (NQ#F, D) Analysis - Showing more weakness than the S&P 500, with a clear short-term downtrend confirmed by breaking below key moving averages (02:34-03:38) - The Nasdaq's support level at 24,400 is critical; breaking below this level suggests a precipitous fall for both NQ and the S&P 500 (03:54-04:09) ### Magnificent Seven (MAGS) ETF Analysis - The MAGS chart displays a complex topping pattern resembling multiple head-and-shoulders formations, which is viewed as a very bearish sign (04:46-05:01) - The ETF has broken below a key support zone with strong volume (05:05-05:09) - Vermeulen compares this pattern to the 2020 COVID crash, predicting a potentially severe multi-year recessionary decline if the neckline breaks (08:12-09:44) ### Precious Metals (Gold - GC) Context - Gold is showing significant strength and new highs, indicating investors are moving toward safety amid equity concerns (10:58-11:02) ### Market Psychology and Historical Comparison - Vermeulen notes that while people say 'this time is different' regarding the current tariff concerns compared to 2020 COVID, the price action patterns look strikingly similar, suggesting a potential major sell-off is likely (08:33-09:10) ![Screenshot at 00:00: Chris Vermeulen and John Gillen discussing market technicals, showing the S&P 500 daily chart \(ES#F, D\) with moving averages indicating a strong uptrend nearing a potential pause \(00:00\)](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-00-00.jpg) ![Screenshot at 00:21: Daily chart of ES#F showing the price above the 50-day and 200-day moving averages, but recent action shows a pullback toward support, indicating a pause in the primary uptrend \(00:21\)](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-00-21.jpg) ![Screenshot at 02:34: The Nasdaq 100 \(NQ#F, D\) chart showing a more pronounced weakness than the S&P 500, with price below key moving averages and a clear short-term downtrend structure \(02:34\)](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-02-34.jpg) ![Screenshot at 04:45: The MAGS ETF chart overlaid with hand-drawn blue lines illustrating a potential multi-peak topping structure resembling several head-and-shoulders patterns, suggesting a major reversal \(04:45\)](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-04-45.jpg) ![Screenshot at 08:24: A slide comparing the current '2025 TARIFF' market structure to the '2020 COVID' sell-off, highlighting the similar sharp initial drop followed by recovery attempts \(08:24\)](https://ss.rapidrecap.app/screens/kXU8QBy_7sE/00-08-24.jpg)