Tue 9 March 2010
Next tech boom coming --
Nasdaq monthly chart says it all
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Image source Bloomberg Finance
Nasdaq has finally broken upside from the resistance line drawn from its all time monthly high in February 2000. This happened last Wednesday when it went past 2280 and now 3 days later, at 2332, it has clearly broken upside. Nasdaq will now proceed to challenge its previous monthly high of 4696, some 101% above the current close.
Our note on 24 February 2010 below predicted this and expected the weekly breakout to occur at 2345. However, the longer term monthly chart has now given us the earlier signal. The Dow and S & P 500 broke upside in November 2009 from the resistance lines drawn from their all time high of October 2007. Nasdaq has now also broken upside, late but nevertheless a sweet breakout. Nasdaq stocks: technology, internet stocks, can be expected to outperform the general market from here. With so much cash in the Nasdaq sector stocks, leading to more M&A activities, stock buybacks, etc, one can expect technology and internet stock valuation to rise significantly in coming months.
Wed 24 February 2010
Nasdaq weekly spot on to test upside resistance
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Image source Bloomberg Finance
The above Nasdaq chart shows that at 2317 on 8/1/10, Nasdaq returned to the pre-crash resistance and had no choice but to correct down. Now that the correction has occurred, Nasdaq is back on support and is poised to assault the resistance line again at about 2345 near term. Hence I am looking for a 6% upside from here or 132 points gain to reach resistance again short term and hopefully breaking it. I believe Nasdaq, which is still 56.9% down from its all time high of 5132 on the monthly close on 31/3/2000, has the most upside potential, compared to the Dow of 27.6% discount on its all time high of 14198 on 31/10 /07 and S&P 500 of 30.6% discount on its all time high of 1576 on 31/10 07.
While the general economy is recovering from the GFC of 2008/2009, the Nasdaq sector had its GFC back in early 2000 with the tech wreck and now this is the most cashed up sector of the economy. I expect significant amount of M&A activities in the months ahead which will fire up this sector, giving us potentially the second tech boom to take advantage of. Call that the second tech boom or the Web 2.0 boom or whatever, this sector has billions dollars of corporate cash to be deployed and to inflate stock valuation. Check this article out:
"When we tally up all the cash, there is over $260 billion available from these few tech companies that could be deployed for mergers, acquisitions, or the good old dividends. Again, that is before tallying up credit lines, factoring, debt sales, and other financing methods"
Fri 5 February 2010
Dow, S&P and, Nasdaq indices to break upside soon
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Image source Bloomberg Finance
All 3 indices have been trending in downward sloping pennant formation with the 4th wave just completed last night. I would expect the 5th wave to commence tonight and it will be an up wave which ultimately breaks upside to test the previous highs.
Tue 5 January 2010
Equity indices breaking upside in past 24 hours
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Image source Bloomberg Finance
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The above charts, the US Dow, S&P500, Nasdaq, and the ASX All Ords, all show that 2010 has started with an upside breakout of the sideway trading patterns of all 4 indices in the second half of 2009 particularly since September. Nasdaq, as you can see, has led the US market and has resumed the advance after a reasonable pullback. We can look to the next few months with confidence.