NASDAQ Composite (.IXIC) – Big tech gains aren’t ‘extraordinary’ after all
The tech-heavy Nasdaq 100 index has soared almost 40 per cent over the last year, prompting various critics to complain of seemingly extraordinary gains driven by central banks’ easy money policies.
That’s not the case, says Price Action Lab blogger Michael Harris. Yes, a 38 per cent 12-month gain is high, but it’s far from “extraordinary”. Rather, it’s less than one standard deviation above the one-year norm, notes Harris, who examined Nasdaq data dating back to 1985.
Freakish
Indeed, one-year returns have been much higher in the past, particularly during the 1990s. There have been 11 occasions where one-year Nasdaq returns exceeded 50 per cent and six occasions where they topped 80 per cent.
Commentators often assume there’s something freakish about big returns, but wild swings are a feature of the markets, not a bug. “If the Fed is driving the markets as many analysts claim,” says Harris, “it hasn’t been doing a good job judging from the market growth in the 90s”.
Technical Indicators
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 9,157.39.
The projected upper bound is: 9,954.61.
The projected lower bound is: 9,556.17.
The projected closing price is: 9,755.39.
Candlesticks
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 doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 Indicators
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.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.4375. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 16 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 71.36. 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 15 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 99. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 19.208 at 9,731.176. Volume was 4% below average (neutral) and Bollinger Bands were 48% wider than normal.
Open High Low Close Volume___
9,728.9049,746.3619,693.0529,731.176 536,343,200
Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 9,577.92 9,138.83 8,333.44
Volatility: 14 14 19
Volume: 577,575,488 595,071,104 559,070,720
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.
Summary
NASDAQ COMPOSITE is currently 16.8% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 82 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.
