Nasdaq: are we about to see further highs?
The index has performed with impressive strength. Our chartist sees if this rally can continue.
5th November 2020 09:46
by Alistair Strang from Trends and Targets
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The index has performed with impressive strength. Our chartist sees if this rally can continue.
The Nasdaq (Nasdaq:NDX)
It was around 4.30am when the penny dropped, a realisation the US election was being viewed for 'entertainment' value. There was no great underlying geopolitical motive, instead the US results (washed down with plenty of rum) proved as enjoyable as watching Eurovision results while ducking the horror of actually watching the acts perform.
Perhaps this explains the fascination within the UK and Europe for the still unravelling American mess.
The US has turned ‘normal’ on its head. There's a saying about 'counting chickens before the eggs are hatched' and it's something the markets are dangerously close to forcing us to propose, especially with the Nasdaq.
Strangely, an issue made itself clear during the night as we were watching market futures in conjunction with TV election coverage. When it looked like Trump would make a gain, futures for Wall Street would blip upward.
Conversely, when Biden looked like making a gain, Wall Street futures would dip. This state of affairs continued until 8am, when everything turned on its head and the night-time decline started to reverse.
This time, it is only a gain for the Democrat contender to provoke Wall Street gains!
Analysis of this behaviour quickly revealed a cause. No-one has a clue what's actually going on.
This brings us to the Nasdaq. On 4 November, the index has performed with impressive strength and now calculates with the potential of some amazing numbers.
Apparently growth next bettering 11,850 points should attempt an initial 12,066 points.
If exceeded, our ‘longer-term’ secondary computes with a target of 12,433 points, virtually exactly matching the all-time high from the start of September.
Importantly, there's something significant about such ambition.
In the event the Nasdaq somehow manages to close a session above 12,433 points we've a strong logic demanding a cycle of further gains commence, giving a present of an additional 1,001 points.
For trouble to make itself known, the Nasdaq needs to reverse below 11,300 points.
Such calamity risks provoking reversal to an initial 9,670 points with secondary, if broken, at 8,560 points.
Visually this appears unlikely but do remember the big rule: these times are not normal.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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