Target Nasdaq 25,000 for market top
There is a discussion that the market might be heading for a top. I have reviewed the monthly chart going back 20 years to the great big bull of the 90s, the index at the time was consistently uptrending with the the price being 80% above the 50Month MA. The market traded in a channel for years and once it broke above that channel, which became support in 1999 and in the following year topped when the price hit 210% above of the 50Month MA (5132 high vs 1645 50month MA).
If history repeats itself (at the time of writing this note in January 2021) at the moment the 50 month SMA is around 6812 whilst the index however around 13,635. That means that even though the index price is trading outside of the normal channel band since July of last year, it is now possible that it will go forward to do a climax top sometime around summer target being September of this year. At the moment the index is trading at double (100%) above the 50 Month MA. However in order to become extremely overbought, it needs to continue to grind higher and consolidate sideways as it has been doing.
What are the parallels of 1999.
1) In 1999 there were IPOs today there are SPACs.
2) In 1999 there was AOL today there is TSLA.
3) Top stocks were splitting and raising money with secondaries just like they do nowadays.
4) In 1999 was the era of the Internet / communications, today we have EVs and now moving to EV infrastructure and Space exploration.
5) Everyone wanted a piece of the market, Joe Public started becoming a "professional" trader and making more money than his normal income.
6) Everyone was rushing for the next big stock to buy, everyone was pumping, swings were very wild and the nasdaq was not trading in sync with the normal s&p index.
All of the above and more factors convince me that history is repeating itself and that we are in for a great year. I am expecting that the 50Month MA to move up another 25% in the next few months to around 8500 and the index could peak at 250%-300% of the 50 month MA which would equate to a price of 21,300 - 25,500. Calling the Nasdaq top at 25,000 looks extremely optimistic, but at the same time frame in 1999 the market kept moving up by 80% to reach the market top. Based on today's price a move of 80% up also gives a price of 24,500 so this call although absurb is quite feasible.
I am long the stocks and plan to remain long and buy stocks until the Nasdaq hits 20,000 from which then the market will become extremely volatile and will start unwinding positions and take a break.
Good luck to everyone, do your own DD.
If history repeats itself (at the time of writing this note in January 2021) at the moment the 50 month SMA is around 6812 whilst the index however around 13,635. That means that even though the index price is trading outside of the normal channel band since July of last year, it is now possible that it will go forward to do a climax top sometime around summer target being September of this year. At the moment the index is trading at double (100%) above the 50 Month MA. However in order to become extremely overbought, it needs to continue to grind higher and consolidate sideways as it has been doing.
What are the parallels of 1999.
1) In 1999 there were IPOs today there are SPACs.
2) In 1999 there was AOL today there is TSLA.
3) Top stocks were splitting and raising money with secondaries just like they do nowadays.
4) In 1999 was the era of the Internet / communications, today we have EVs and now moving to EV infrastructure and Space exploration.
5) Everyone wanted a piece of the market, Joe Public started becoming a "professional" trader and making more money than his normal income.
6) Everyone was rushing for the next big stock to buy, everyone was pumping, swings were very wild and the nasdaq was not trading in sync with the normal s&p index.
All of the above and more factors convince me that history is repeating itself and that we are in for a great year. I am expecting that the 50Month MA to move up another 25% in the next few months to around 8500 and the index could peak at 250%-300% of the 50 month MA which would equate to a price of 21,300 - 25,500. Calling the Nasdaq top at 25,000 looks extremely optimistic, but at the same time frame in 1999 the market kept moving up by 80% to reach the market top. Based on today's price a move of 80% up also gives a price of 24,500 so this call although absurb is quite feasible.
I am long the stocks and plan to remain long and buy stocks until the Nasdaq hits 20,000 from which then the market will become extremely volatile and will start unwinding positions and take a break.
Good luck to everyone, do your own DD.
Adrian Sciberras
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