NASDAQ Composite (.IXIC) stimulus powered earnings growth is expected to slow down further in 2019
THE tech-heavy index Nasdaq Composite ended 2018 down 3.88 per cent for the year. It is the worst annual performance since 2008 and a reversal from the 28.2 per cent increase in 2017. The unsettling Sino-US trade dispute, slowdown of major economies and four rounds of interest rate hikes by the US Federal Reserve are factors influencing the decline. Despite closing the year in negative territory, Nasdaq logged many record-high trading days last year and recorded an all-time high of 8,133.30 in August 2018. These were largely fuelled by the stimulus of tax cuts and fiscal policies, as well as robust economic growth in early-2018.
With a longer-term investment horizon, investors may tap the inflationary growth of the global economy and the vast opportunities offered in the evolution of technology. Since the tech index commenced in 1971 at 100 points, it has gained more than sixty-five folds (excluding dividends). Although past performance is not indicative of future results, longer-term investors with a more resilient portfolio and healthy cash flow are more often able to sail through the storms.
In summary, the Nasdaq has technically been trading in a downward trend since August 2018, with the support line found near the 6,200 level. Despite the recent post-Santa rally, the bearish trend is still intact. Facing immediate resistance at the 6,800 point, followed by the 50MA and 100MA lines, the index is unlikely in the near term to reverse its course. However, this provides an opportunity for longer-term investors to rebalance, and to dollar-cost-average out their portfolio.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 7,112.00.
The projected upper bound is: 7,155.44.
The projected lower bound is: 6,293.08.
The projected closing price is: 6,724.26.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles
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 75.4481. This is not an overbought or oversold reading. The last signal was a sell 1 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 47.94. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 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 41. This is not a topping or bottoming area. The last signal was a buy 6 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 2 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 275.353 at 6,738.857. Volume was 11% above average (neutral) and Bollinger Bands were 60% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 6,527.63 7,036.94 7,455.23
Volatility: 53 40 26
Volume: 739,186,944 650,978,176 557,013,120
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 is currently 9.6% below its 200-period moving average and is in an downward 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 bearish on .IXIC and have had this outlook for the last 16 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.