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Nasdaq Composite Index CFD

Trend Lines, Support, Resistance for 9/28Trend lines drawn from 9/3 (17d), 9/22 (5d), recent bottom 9/24 (3d) and today 9/28 (1 day). The Nasdaq continued it's rally off of the recent bottom from last Thursday's open. Today it tested the 50d MA line 3 times, but rallied in the afternoon to close near the high. Daily volume is trending down and you could consider the daily candle a hanging man, both possible tops to the current rally. If the rally continues, expect some resistance around 11,250 which has been the upper side of a channel in September. That would still allow for another 1.75% gains. Following todays ascent, would be a more modest 0.83% gain. A small to large pullback is also certainly possible in this volatile month of moves. The five day trend points to a 0.98% decline. The longer term trend from market peak on 9/2, points to a return to the July Support area, a 3.65% decline. I'm keeping the June Support line and the possibility of a future decline to that point on the map. It's possible, but not likely to have that happen in one day. As a reminder, there are only two days (July 1 and 2) filling the gap between June support and July support. A fall below July support would be dangerous.
NASDAQ:IXIC
by drewby4321
The 2020 Tech Bubble ExplainedIf you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight. In this post, I’ll be explaining ‘The 2020 Tech Stock Bubble’ crisis, through the lens of the Dot com bubble of the 90’s. In the process, I’ll also provide educational content on technically spotting a bubble through different phases. What is a Financial Bubble? A bubble is said to have formed when equity prices rise significantly, far beyond their proper valuation, in a short period of time. Bubbles are intangible and hard to spot, but their existence is undeniable, and hard to ignore. As such, it’s important for traders and investors to manage their risk before the bubble bursts. What is the Dot-com Bubble? - The Dot-com Bubble, also known as the Internet Technology Bubble, was a rapid rise in US tech stock equity valuations fueled by retail and institutional investments in internet based companies during the late 90s. - During this bubble, we saw an exponential move in the market, in which the Nasdaq index rose from under 1,000 to over 5,000 within 5 years. - The Dot-com Bubble grew out of a combination of speculation: investing in internet tech-stocks at the time was the typical get-rich-quick scheme, as there were huge venture capital funds ready to be spent on startups with minimal substance. - Capital flew into those companies, in hopes that they’d be profitable one day, and these investments were done in an extremely bold manner, with retail investors and institutional investors both looking to maximize profits on a speculative basis. What are we seeing today? - The market we are seeing today is not moved by investors who are looking at the long term prospect of the company. The Nasdaq Index overextending well above the 20 Simple Moving Average (SMA) on the monthly demonstrates that the market is driven primarily by momentum. - After the strong ‘V shape’ recovery we witnessed from the Corona Virus (COVID-19) stock market crash, people are trying to expose themselves to the financial market with the wrong mindset- chasing the next big thing, that will make them rich quick. The general public is trying to speculate where all the money is flowing into, and they arrive at one conclusion: tech stocks. - As such, it could be said that on a bigger picture, the market’s characteristics we see today are very similar to that of the Dot-com bubble. With a clearly bullish market trend, the number of new investors who are introduced into the market increase by the day, and with the profits they witness through growth stocks (and tech stocks in particular), 30% gains in a day has become a new norm for them. However, this does not indicate that one should liquidate all their assets, and cash out before the bubble bursts. Counterarguments 1. Introduction of liquidity by the Fed The Federal Reserve has been printing money at an unprecedented rate in order to rescue the economy from the Coronavirus pandemic. As such, it’s only logical that the stock market rises at least as the same pace at which money is being supplied. The Fed’s approach towards money supply is completely different from that of the 2000’s, which is why comparing the current tech-driven bull market to the Dot-com bubble is an incorrect analogy. 2. Momentum Relating to the reason above, it could be said that momentum was introduced to the market trend ever since the Fed started actively intervening in the economy. They decided to leave the interest rates near zero, at least until 2023, which indicates that momentum could continue throughout for years. 3. Fundamentals of Tech Stocks Unlike companies of the Dot-com bubble, tech companies today demonstrate some value and substance. Amazon (AMZN) is one of the few companies that survived the Dot-com bubble burst, and later grew to become a multibillion dollar conglomerate. Arguably a tech stock, Tesla Motors (TSLA) has also shown incredible performance in their financials over the past few quarters, demonstrating substance in their rise in stock prices. Whether the current valuation of the tech giants leading the Nasdaq index today is another question. One thing that’s very clear is that with the 4th Industrial Revolution, companies in the tech field show unprecedented rates of growth and innovation, which could justify the current bull market. How to Spot a Bubble Spotting a bubble is extremely difficult, if not, impossible. Most people weren’t aware of the Dot-com bubble until they later thought about it in retrospect. However, referencing Hyman Minsky and Charles Kindleberger’s work can help us understand the structure of a bubble, and the characteristics of the market in each phase 1. Displacement Bubbles star with a shock to the system. They could be events like war, political change, technological innovation, or the introduction of a new monetary policy. A displacement creates a new opportunity for a sector of the economy, and in this case, it’s technology. 2. Boom A boom begins as optimism grows. A positive feedback loop leads to greater investment, which then leads to economic growth. Borrowers increasingly become more willing to take on debt and risk. 3. Euphoria Participants expect prices to increase at unsustainable rates, and even with a small number of people realizing there is a bubble, they continue to participate in the market thinking that they can load their assets to someone else before the market bursts. The general public begins to enter the market as media attention grows, and as individuals see their friends and acquaintances get rich. This is the phase of irrational exuberance. 4. Distress At some point, an event that causes a decline in confidence takes place. Depending on each bubble, panic can set in immediately, or could take several years to fully develop. 5. Panic When a crisis takes place, most people don’t even realize that it’s happening. Insiders and institutional investors are usually the ones to sell first. Panic is introduced into the market at retail investors all attempt to sell at the same time. This sell-off caused by panic continues until investors are convinced that cash will be made available to meet demand, leading investors to buy back in. Conclusion Despite the current stock market index highly resembling that of the Dot-com bubble era, we also have to take into account the fact that many factors that fundamentally affect the stock market have changed. Also, considering that the Dot-com bubble lasted almost 5 years, even if we could confirm that the current market trend is a bubble, it does not necessarily indicate that the bubble will burst immediately. While it’s difficult to have patience, and suppress the urge to sell at the peak, buy back in when the market bottoms, investors should realize that there is still a lot of capital that could potentially flow into the market. As such, in lieu of trying to time the top, they should be focused on the market trend’s momentum, and execute their orders based on the confirmations provided by the market.
TVC:IXICLong
by Michael_Wang_Official
13
Trend Lines and Support for Nasdaq, 9/25Trend lines drawn from 9/3 (16 days), 9/21 (5 days) and today 9/25 (1 day). The Nasdaq had a bullish run on Friday, with a steep climb marked with very few pullbacks. If that ascent were to continue, we'd have a 3.61% increase on Monday. More likely, would be a pause around the 50d MA where several top stocks are getting resistance. That would be a 1.00% increase. A small to large pullback is also certainly possible in this volatile month of moves. The five day trend points to a 0.71% decline. The longer term trend from market peak on 9/2, points to a return to the July Support area, a 2.69% decline. I'm keeping the June Support line and the possibility of a future decline to that point on the map. It's possible, but not likely to have that happen in one day. As a reminder, there are only two days (July 1 and 2) filling the gap between June support and July support. A fall below July support would be dangerous. A look at the weekly QQQ with volume. It is a strong bullish candle with a tall body and small upper and lower wicks. It sets a good expectation for next week, but the market will do what it wants to do.
NASDAQ:IXIC
by drewby4321
2
Trend Lines and Support for Nasdaq, 9/24Trend lines drawn from 9/3 (15 days), 9/18 (5 days), yesterdays peak 9/23 (2 days) and today 9/24 (1 day). After a whipsaw up and down, the Nasdaq ended up slightly on Thursday on higher volume. The closing range is right around 50% for the day but the second half of the day was on the downward trend. Possibilities for Friday could be positive if the July support line holds for another day, showing less selling pressure. That would be an increase from 0.6% to 1.79%. If that support line doesn't hold then the regressions points to a 0.85% to 2.79% drop. The challenge is that the gap between the two support lines is only represented by two days (July 1 and 2) of trading. That is not very much trading volume to hold the value above June Support. So I added a fifth possibility to drop -6.19% as a worst case.
NASDAQ:IXIC
by drewby4321
2
IXIC: What Beta Means When Considering a Stock's Risk If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight. In this post, I will be providing a thorough explanation on the concept of Beta, and why it's important to consider the Beta value when investing in stocks. Definition Beta is a measure of the volatility , or systematic risk, of a security or portfolio compared to the market as a whole. It is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for stocks. For beta to be meaningful, the stock should be related to the benchmark that is used in the calculation. However, a text-book definition of the concept does not really help us understand what Beta is How to calculate the Beta - To begin with calculating the value, we must first start by spotting the price change of a certain stock in comparison to the market's movement - After a certain period, we collect enough data (grey dotted points), allowing us to plot a trend - With this, we can figure out the relationship between the profitability of the stock we are looking at, and that of the market - Based on the data, we calculate the Beta by dividing the product of the covariance of the stock's returns and the market's returns by the variance of the market's returns over a specified period. Explained Through Examples - We can consider 3 types of stocks: - Stock 1 with a Beta value of 1 - Stock 2 with a Beta value of 0.5 - Stock 3 with a Beta value of 1.5 - We assume that these stocks are all listed on NASDAQ, and the NASDAQ Composite Index (IXIC) moved up by 10% - Stock 1, which has a Beta value of 1, will show the exact same movement paired to that of the market. It reflects 100% of the market's movement - Stock 2, on the other hand, reflects only half of the market's movement, with a Beta value of 0.5 Thus, it moves up by 5% - Stock 3, moves up by 15% as it has a beta value of 1.5, moves up more drastically than the market value, indicating that the stock is more volatile Four Possible Cases for Beta Values - We can consider four possible cases for Beta values: Beta Value Equal to 1 In this case, the security (stock) shows a strongly correlated movement with the market movement. Examples of such securities include Exchange Traded Funds (ETFs) such as QQQ which track the Nasdaq 100 index . Adding a stock to a portfolio with a beta of 1.0 doesn’t add any risk to the portfolio, but it also doesn’t increase the likelihood that the portfolio will provide an excess return. Beta Value Less Than 1 A beta value that is less than 1 means that the security is theoretically less volatile than the market. Having a stock with such beta value helps make a portfolio less exposed to risk. Utility stocks often have low betas because they tend to move more slowly than market averages. Beta Value More Than 1 A beta that is greater than 1.0 indicates that the security's price is theoretically more volatile than the market. As in the example above, if a stock's beta is 1.5, it is assumed to be 50% more volatile than the market. Tech stocks tend to have higher betas than the market benchmark. Having a stock with such beta value exposes the portfolio to more risk, but also higher potential returns as well. Negative Beta Value A security with a negative Beta value means that the stock is inversely correlated to the market benchmark. Prime examples of such securities are inverse ETFs, and certain industry groups such as precious metal mining companies, where a negative beta value is commonly found. Real Life Examples - Based on the explanation above, we can now move on to the following examples of stocks listed on NASDAQ for real life examples: Lulu Lemon (LULU), Tesla Motors ( TSLA ), Amazon ( AMZN ), Costco (COST), ProShare UltraPro Short QQQ ETF ( SQQQ ) - Based on the NASDAQ Composite's movement (IXIC), we can see how certain stocks in certain sectors react differently, in similar trends - In the case of stocks such as LULU and TSLA , we can see that the Beta value is extremely high, as their corrections and impulse moves are severely exaggerated compared to IXIC - Amazon's movement also reflects a high beta value, but not as high as that of TSLA and LULU - COST, on the other hand, seems to have a beta value close to 1, as it follows the movement of IXIC. It's less risky, as the drops are not as severe, but the potential profits are not too high either - SQQQ , on the other hand, is a 3x leveraged ETF that tracks the Nasdaq 100 index . As such, it has an inverse beta value, and shows huge spikes during times of correction for IXIC Limitations of Beta - The beta coefficient theory assumes that stock returns are normally distributed from a statistical perspective, but returns aren’t always normally distributed. - A stock with a very low beta could have smaller price swings, yet it could still be in a long-term downtrend. So from a practical perspective, a low beta stock that's experiencing a downtrend isn’t likely to improve a portfolio’s performance. - While the Beta value is useful in determining a security's short-term risk, it becomes less meaningful for investors attempt to predict a stock's future movements. Conclusion Understanding the concept of Beta is essential in portfolio diversification. A good investor can identify bullish and bearish market trends, and rebalance their portfolio accordingly. A good balance of securities with varying Beta values is imperative for a good balance between risk management and profit maximization.
TVC:IXICEducation
by Michael_Wang_Official
3
Trend Lines and Support for What Comes NextRegression Trend lines drawn from 9/3 (42 bars), 9/17 (5 bars) and today 9/23 (1 bar). A few possibilities here. A positive bounce of July support would take us back to the 50d MA. Unlikely that we would cross over that line without a pause. The 5d regression line points to a lower but still healthy increase of 1.19%. But the sharp downward action of Wed does not make those first two options seem likely. More likely is either sideways riding the support from a July trading channel. Or if that support fails, then the next likely stop is a June support channel and the round number pause at 10,000.
NASDAQ:IXIC
by drewby4321
3
Market Rotation Into Energy (XLE) The past week there was rotation into Energy (XLE). There is precedent for rotations into energy marking tops and continuing as safe havens during corrections. In the bottom chart, you see the rotation happening in September 2018, just before three months of market declines (21% on S%P 500 and 24% for Nasdaq). Looking back further to the 2000 tech bubble, look at stocks like CVX, XOM and SLB. These stocks are going up or sideways while the market is crashing around them. On the other hand, 2018 these stocks fell along with the market. So the question is are we in a correction? If so, is it more like 2000 or 2018? Have energy stocks been held down while the tech bubble grew? Will we see energy stocks climb over the next few months?
AMEX:XLC
by drewby4321
1
NASDAQ Look for continuation out of this correction Hello everyone: NASDAQ is looking very clean for the next continuation down. We see price dropped down impulsively from the top, broke out of the HTF ascending channel. Then we see price begin to consolidate, and potentially forming a correctional structure. I do see this as a continuation, to correct the previous down move. I would like to see price breakout from that structure, and look for LTF correction for entries down to the next lows. Thank you
OANDA:NAS100USDShort
by jojofang0901
6
Nasdaq Index: Technicals and the 2020 US Presidential ElectionsIf you like this analysis, please make sure to like the post! I would also appreciate it if you could leave a comment below with some original insight. Analysis - To begin with, we can look at the Nasdaq Index's monthly chart on the logarithmic scale - The logarithmic scale provides a broader overview of the general trend, as well as clearer percentage changes in the market - We can first see that Nasdaq (IXIC) dropped significantly during the 2008 financial crisis. - After dropping a whopping 55% (which is a lot considering that this is an index), it has been on a steady uptrend ever since - The Nasdaq Index has been on a clear and steady uptrend since 2009, trading within an ascending parallel channel - Ever since it reclaimed moving average support as well, prices never dropped below the 30 simple moving average (SMA). - The Ichimoku cloud also demonstrates that the trend is clearly bullish for the long term, as prices trade above cloud support - There have been times in 2010 and 2011 when prices tested the upper channel resistance, only to drop back and test the channel's middle line support - During the recent market crash caused by the Corona Virus (Covid-19) outbreak, while prices have initially dropped below the channel support, the candle managed to close above it - Nasdaq was able to not only reclaim the lower trend line support, but also the 30 sma support - Last month, however, prices have overextended and tested the ascending trend line resistance once again. - Based on current technicals and the fact that the 2020 US Presidential Elections is not far ahead, even a significant 26% drop would maintain the bullish trend. - The Moving Average Convergence Divergence (MACD) shows weakening bullish histograms, but the trend's overall momentum remains solid. Conclusion As historical data demonstrates that the stock market has a tendency to correct before the US presidential election takes place, it's also logical to expect a form of correction, specifically in the more volatile Nasdaq Index. However, we are seeing potential signs of a functioning vaccine being developed for the Corona Virus, and with my personal expectation that the virus will no longer post any obstacles to mankind by the end of next year, that gets rid of a major issue preventing the market from further rallying. Interest rates will continue to remain low for a while, and with bullish technicals being intact, it's suggested that people look to 'buy the dip' during times of a correction.
TVC:NDQ
by Michael_Wang_Official
5
Nasdaq Composite Hyperbolic Growth: 28000 in 2024 Look at this boi, Nasdaq Composite has gone up almost 80% since testing the 50-month moving average in March 2020. This demonstrates how strongly bullish the market fundamentals are, remember Fed confirmed on yesterday 27 Aug 2020 that they will tolerate higher than usual inflation, just to keep the interest rate close to zero! Basically Fed and Donald Trump (he doubtlessly will be reelected) will continue to smash cheap and free money into the American stock market, and with interest rate so low, Americans really have nothing else legitimate enough to invest. Looking at Nasdaq Composite's performance from 1996 to 2000, the 80% jump since Mar 2020 seems weirdly reminiscent. It confirms that IXIC is going through a similarly Hyperbolic trajectory, which means IXIC will go up faster and faster, corrections will be smaller and quicker to recover, until the 'singularity point' like October 1998 where IXIC just refuses to go down, always up and up, until it sucks most potential investors dry of cash. Remembering the long term bullish nature of IXIC, the day chart indicates some correction is due soon. The huge bullish run since 23 March 2020 is obviously highly impulsive, so Elliott Wave theory tells us it will very likely reverse around the 1.618 extension of the 19 Feb to 23 Mar correction. Since the 1980s, IXIC has often corrected 15-25% after going up 70-80%. Nasdaq Composite went up 76.44% from 5 Dec 1994 to 20 May 1996, then it dropped 19.43% in 56 days. I think IXIC will retest the 10000 support again within 2 months, possibly caused by USA election or US-China trade uncertainties. The Christmas season is usually bullish, so we will see 12000 and probably higher again in January 2021.
TVC:IXICLong
by MarcusAu
1
Regression Trends, Support and ResistanceThe broader Nasdaq Composite Index had a great reversal day, but what comes next? The top 4 market cap players were testing support and resistance lines, indicating indecision on where investors think the market will go. Having one of these make a big move either direction would certainly impact the others and the broader index. Taking a look at overall market, there is a lot of room to move downward if that's the direction that things take. Even in the shorter term of 1 year, the market is very extended beyond the Regression Trend midpoint. There's plenty of support historically, for the market to take a large correction in the other direction to bring the average growth back to the midpoint. In fact, you can see that as 35y, 5y, 2y regression midpoints converge to nearly the same location. These regression midpoints aren't perfect, but even adding some +/- error to the locations, it still gives the market a lot of room to move down. Outcomes could be support near the 1y midpoint where you'd also have 200d support and the pivot point of the previous peak. That would be near a 15% decline. Beyond that, there is not much support until you get to the bottom of the March crash. So another ~15% drop would be feasible. 2020 already claims 3 of the 20 largest percentage drops in Nasdaq history. And it's 2020 - it wants to be the best at being the worst!
NASDAQ:IXIC
by drewby4321