NASDAQ Analysis January 2015 (M)
Created on Thursday, 01 January 2015 01:02
Written by Austin Galt
The NASDAQ Composite Index has been a standout performer over the last five years however it is approaching some serious resistance. Let’s take a quick look using the monthly chart.
NASDAQ MONTHLY CHART
The Bollinger Bands show the bull trend to still be in a solid position with price up near the upper band. This is coming after price found nice support at the middle band.
The Relative Strength Indicator (RSI) is showing a bearish divergence but there is still plenty of room on the upside for it to go and still show a bearish divergence.
The Stochastic indicator has a bullish bias and is in overbought territory which is normal for a strong uptrend.
The Moving Average Convergence Divergence (MACD) indicator also has a bullish bias with the red line below the blue line. No damage to be found here.
So things still appear rosy for the uptrend however there is a clear target for the bull trend to finish. What is that?
It is the all time high set back in March 2000 at 5132 and is denoted by the horizontal line. I am looking for price to trade up and test this level. I doubt price will trade above it but it won’t be far away if I’m right. This would make a massive double top which could be expected to lead to a massive move down. We won’t bother yet trying to determine where any move down will end. Let’s wait for the coming top to be confirmed first.
Now double tops generally don’t end trends so once the expected massive move down finishes then a move back up to new all time highs in the ensuing years could be expected.
The current price of the NASDAQ is 4736 which means the all time high is over 8% higher. I like double tops to be within 1-2%. So perhaps we could expect a move higher in the vicinity of 7%. That should not be too hard to accomplish over a 2 month time frame. Anyway, it’s getting exciting!