Aug 24, 2012

Next NASDAQ target




Seasonally repeated NASDAQ100 patterns proved to generate useful buy and sell signals for the last three years. This post is continuation and update of the “NASDAQ target reached! Now what?” post. 

On the chart I have used simple analysis which follows the strength of the recent bull markets and the range of the bear ones as a base for building projection for the next NASDAQ target. As chart shows for the last three years there is clear seasonal relationship – autumn spring bull period followed by summer corrective zig-zag. 

NASDAQ cyclical pattern
NASDAQ cyclical pattern
Currently we are at the end of the summer and using the logic of the previous two cycles we should enter new bull phase of the cycle. The foundation of the projection is the summer bottom of 2439 registered on 1st of June. Adding the average gain for the previous two cycles (around 750 points) gives a target level of 3200. This target seems quite optimistic. Probably it is, however, one should consider the relatively big share of Apple in the index compared to the other companies. As a big influencer of the index if the target range of 800-900 for the iPhone maker prove to be true than 3200 for NASDAQ could be completely reasonable target.

Still unclear is whether the consolidation has finished yet. It is possible to see moderate pullback before the market rally unfolds. Again Apple could be major driver as iPhone 5 release is knocking on the door and as history proved new product announcements has been bearish for the stock, at least in the short run (see “The correlation between Apple product launch and stock price”).

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This work with autor CapitalHubs.com is licensed under Creative Commons 3.0.