The Nasdaq Just Triggered a Warning Worth Watching

BY KEITH KAPLAN
CEO, TRADESMITH

On Friday, Feb. 27, the Nasdaq 100 index (NDX) triggered a Flash Stop signal in our system.

It’s the first Flash Stop signal we’ve seen on the Nasdaq since March 14, 2025 – two weeks before the Liberation Day crash.

Before we go any further, I want to be crystal clear about something.

This Flash Stop alert is significant. It represents a rapid short-term breakdown in momentum for the world’s biggest index of technology companies.

But even so, this isn’t a system-wide Bear Market alarm like I saw on March 9, 2020, before the pandemic crash saw its ugliest phase…

Or on Feb. 23, 2022 – months before Wall Street understood the bear market had kicked off.

Our broader Bear Market Alert – the signal designed to flag a full market breakdown – has not fired.

And when I look at the underlying components of the Nasdaq, the shift toward red has been slow and gradual, not the kind of sudden broad deterioration that would have me telling you to head for the exits.

So I’m not here to tell you the crash is coming next Tuesday.

Honestly… I don’t know what comes next. Nobody does.

Regardless, this Flash Stop signal is worth paying close attention to. Especially when you consider that I warned you about how 2026 could turn out…

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Are We in “The Year of the Bear”?

Back on Dec. 16, I went on record saying that 2026 could be the year of the bear.

Not because I was trying to scare anyone. But because the data – more than a century of market history, combined with what our own systems were showing – was pointing in one direction.

A few weeks later, AI disruption fears sent software stocks into a tailspin. Names like Adobe, Palantir, and Salesforce dropped 20% or more in a matter of days.

And if you had been using our Flash Stop system, you would have seen the warning coming.

The signal fired on PayPal as far back as Aug. 22 at $69 – and again on Nov. 7 at $66, before the stock plunged 25%.

It fired on Atlassian on March 26, 2025, at $230 – and again on Jan. 13 at $131, before a 22% crash.

And on Intuit, the signal first triggered Sept. 8 at $669 – and again on Jan. 13 at $605, ahead of a 20% drop.

Each of those signals gave you not one but two chances to get out before the worst days arrived. That’s not luck. That’s a system doing exactly what it was designed to do.

Then February brought another wave of fast, sharp selling in the wake of the Supreme Court’s tariff decision and the White House’s new 15% global tariff rate.

And now, days after the Nasdaq 100 flashed this sell signal, war has erupted in the Middle East.

I don’t say any of this to be dramatic.

I say it because the environment we’re in calls for a clear, disciplined process – and because we built tools specifically designed for moments like this one.

So today, let’s talk about how our Flash Stop system actually works, what it’s saying about the biggest tech index in the world, and why I’m still seeing plenty of opportunity out in the market, even as tech’s momentum halts.

What a Flash Stop Actually Is

After 20 years of pioneering the optimal time to sell your stocks, the Flash Stop is the best sell signal we’ve ever built.

It’s designed to protect you from micro-crashes in individual stocks, ETFs, sectors, and even entire indexes. And when the signals start stacking up across the market – as they are right now – they can flag major market trouble well before most investors see it coming.

Here’s how it works.

Most investors are familiar with the idea of a trailing stop. You set a level – say, 25% below a stock’s peak – and if it falls that far, you sell. That level also climbs as the stock climbs. So you’re more likely to make money – or, worst case, lose less of it.

It’s a sound concept with a serious flaw: It treats every stock the same. And here at TradeSmith, we know no two stocks are the same.

That’s why we built our “smart” trailing stops years ago – customized exit points for every stock based on its own long-term volatility history. A stable stock like Johnson & Johnson gets a tighter stop. A volatile one like Nvidia gets more room to breathe.

But here’s the problem with long-term tools: They’re designed for long-term markets. And the market we’re in right now is one of the fastest-moving, fickle, and volatile markets I’ve ever seen.

That didn’t come out of nowhere.

Around 70% of all trades on Wall Street today are executed by algorithms. More than half of those algorithms have now integrated AI. The New York Stock Exchange processes roughly 1.2 trillion buy and sell orders every single day – triple the volume we saw in 2020.

So when something spooks the market, money doesn’t just walk for the exit. It sprints.

That’s what happened during the April 2025 tariff selloff. The S&P dropped nearly 10% in four trading days. Some individual stocks fell 40%, 50%, even 70% almost overnight. That’s what’s happening in pockets of the market right now.

That’s why we’ve adapted – and built our newest trading indicator.

A Flash Stop – powered by our Short-Term Health indicator – works on a much shorter timeframe. It analyzes just the past six months of a stock’s behavior rather than years or decades. It uses that to establish what “normal” short-term volatility looks like for that stock, and the moment it detects something abnormal – an early tremor of real trouble – it fires a sell alert.

The idea is simple: In a market that can turn on you in a flash, you need to be able to get out in a flash.

The Other Half of the Equation

But here’s something I want to be equally clear about.

Once you have gotten out of a stock that hits a Flash Stop, you can’t just sit idle.

Volatility doesn’t just cut down. Stocks can be just as volatile – if not more so – in an upside recovery.

After the April 2025 tariff selloff nearly wiped out $10 trillion in market value, the S&P recovered all of those losses in just 25 days. Investors who sold everything and sat in cash watching that comeback play out know exactly how painful that can be.

That’s why alongside the Flash Stop, we also built a Flash Buy signal.

It works the same way – monitoring short-term volatility patterns – but in the opposite direction. Instead of detecting abnormal bearish behavior, it looks for the earliest signs that a stock is stabilizing and turning back up. It’s designed to get you back in as early as possible, before a recovery picks up speed and leaves you on the sidelines.

Using both the Flash Stop and Flash Buy together, you have more than just a risk management protocol.

You have a way to capture the full cycle – riding a stock up, stepping aside before the fall, and climbing back on as it recovers.

What the Signals Are Saying Right Now

Here’s what makes this moment genuinely interesting – and why I’d caution against reading the Nasdaq 100 Flash Stop signal as a simple “sell everything” message.

You might expect that with the Nasdaq 100 flashing a sell signal, the picture across large-cap stocks would be uniformly dark. A sea of red.

It isn’t.

Yes, there are Flash Stops firing on some prominent names. Nasdaq 100 stocks Meta Platforms (META), Advanced Micro Devices (AMD), and MercadoLibre (MELI) have all seen Flash Stop signals in the past week. These are pillars of AI, chips, and e-commerce – and they’ve run up significantly from their 2022 bottoms.

When the signal fires on names like these, it’s worth paying attention.

But look at what’s flashing green at the same time…

Apple just triggered a Flash Buy signal. So did Berkshire Hathaway.

And TJX Companies – the parent of T.J. Maxx and Marshalls.

And Stryker. And Cigna. And 3M.

In fact, in the past seven days, our system has generated more new Flash Buy signals among large-cap stocks than Flash Stop signals.

Think about what that tells you.

This is not a market in freefall. It’s a market in rotation. Some parts of it are under real stress. Others are building strength.

The investors who do well in the months ahead aren’t the ones who panic and sell everything. And they’re not the ones who stubbornly hold everything, either.

They’re the ones who know which stocks to sell, which ones to buy, and when to do both.

That’s exactly the edge these signals are designed to give you.

What to Do With This

Like I said, I can’t say for sure what’s coming next after this Flash Stop on the Nasdaq 100.

I just know that our data says the world’s biggest tech index is weakening. And the simplest takeaway is that you should focus on companies that aren’t chasing it down right now.

If you’re a Trade360 member, log in and run your portfolio through the Flash Stop and Flash Buy indicators. Look at what’s in red and ask yourself honestly:

Are you holding any of these because you believe in the business?
Was this a short-term trade that went wrong and turned into a long-term “wait and hope” strategy?
Do you hold so many stocks that you can’t even keep track of what’s working and what’s not?
Could this money be better put to work in a stock that’s flashing Buy right now?

These are the kinds of clear-eyed questions our tools are designed to prompt.

If you’re not a Trade360 member yet, I recently recorded a presentation that walks through exactly how these signals work, the historical evidence behind them, and what I believe they’re telling us about the road ahead – including everything I’m watching in this market right now that I don’t have room to cover here.

It’s called The Tipping Point. I’d encourage you to watch it before the week is out.

You don’t have to agree with my market outlook to find it useful.

But I’d rather you hear the case, look at the evidence, and decide for yourself – than wake up one morning to a portfolio that’s down 20% and wonder what you missed.

The signals are speaking. The question is whether you’re listening.

Click here to watch my new presentation, “The Tipping Point” – and learn how Flash Stops and Flash Buys could protect and grow your portfolio in the months ahead.

The Nasdaq Just Triggered a Warning Worth Watching