As the NASDAQ Composite (.IXIC) sets new records, a reminder how highly valued tech stocks are today
Today the tech-heavy Nasdaq Composite closed at an all-time record high of 8,814.23, up 0.91% on the day.
The Nasdaq is up more than 32% on the year. Turning the clock back, the Nasdaq Composite is up around 60% from the end of 2016. Compared to the anti-records set in 2009 during the doldrums that followed the 2008 crisis, the Nasdaq is up a staggering 594%.
The huge run in value of technology stocks since the last recession is historic. And, given the length of the current global economic expansion, somewhat lost on regular folks.
Times are good, and it’s worth reminding ourselves of how good. After all, the private markets — the world of startups, venture capital and the next big companies — follow the public markets’ lead. If we understand what’s going on with tech stocks, we’ll better understand what is happening with your local startup cohort.
Or more precisely, if you’ve been confused about why every startup is worth a bajillion (plus or minus) dollars, this is why.
A record run
Putting today’s Nasdaq level into historical context is a bit difficult. It has been so long since the last, lasting correction in the value of technology companies that their aggregate share price chart is simply up and to the right. Can you recall the last time tech stocks dropped real value, and stayed down?
The stock market is incredibly strong right now, a fact that is pushing lots of private investors to pay more for growth in anticipation that companies’ revenue multiples will stay high (as dictated by public comps, or what larger companies are willing to pay for startups). So long as the Nasdaq keeps going up, that bet makes the punters look smart.
We could have written this post a few times in the past week, let alone this year. Of course, we can’t post a similar entry every time a tech-focused index hits a new record high — you’d fine it repetitive. But we also can’t not mention it every time, as it is critical to recall that today’s warm climate for startups is predicated on a public market trend that will not — cannot — last.
When will things change? No one knows. So far this December there’s no mini-crash to worry about. Things just look good, and healthy, and flush with new records.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 8,990.23.
The projected lower bound is: 8,671.49.
The projected closing price is: 8,830.86.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 12 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.0252. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 71.68. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 10 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 200.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 79.348 at 8,814.227. Volume was 19% above average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 8,647.30 8,393.34 8,043.43
Volatility: 10 12 18
Volume: 555,034,688 518,980,064 550,635,328
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 9.6% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 41 periods. Our momentum oscillator is currently indicating that .IXIC is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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