Nasdaq is a forming bubble in 2014?
April 30, 2014 - Nasdaq closed today at 4,114.56. Nasdaq has been rallying since its low point March 9, 2009. Nasdaq has seen a low point on March 9, 2009 at 1268.64, its lowest point since Oct 9, 2002.
With in the last over 5 years Nasdaq rallied by 224%. That is Nasdaq index has more than tripled in the last 5 years. It is an astonishing rally for the stock market. However US stock market has a very good history of revisiting the decade lows.
Nasdaq has reached its all time high on March 10, 2000 at 5,048.62. Nasdaq has been plummeted to 1,108.49 down by 78% on Oct 10, 2002. Nasdaq has reached a double bottom on March 9, 2009.
Double Top Testing Followed by Double Bottom Testing?
Currently Nasdaq is trading well above 4000. It needs to 20% rally to test the double top. With the current market trend, it will try to retest the all time high. In case, if it reached all time high that is around 4900 to 5100, there will be huge of number of people ready to the short the index. With in the next couple of months, we will see wild market swings since some people belive that market has topped and others thinks that it has to retest the all time high. Based on the market participants and psychology will move the market for the next 2 to 3 months. We can see panic short covering as well as panic selling that create massive volatility in the market.
However once the market belives that Market has topped out, then we will officially placed under bear market for the next over 18 to 24 months. By that time, there is no surprise, if we revisit the double bottom of 1,108.49.