I'm going to share some of my thoughts on technology stocks, and talk about why I am concerned about the future of tech stocks / Nasdaq composite.
The red boxes indicate major pullbacks, the blue boxes representing short bear markets. One thing to note is that the bear markets indicated in blue are tradable, whereas the major pullbacks in red really aren't. Through this analysis I'm attempting to determine how much longer the Nasdaq/S&P 500 as a whole will remain tradable in the near future.
Throughout this, I will not be focusing on fundamentals, rather technical and trend analysis. My personal philosophy is that it doesn't matter how healthy the company, humans are emotionally driven (I say this despite the fact that the majority of trades are executed by artificial intelligence/bots, but who made those?). I prefer simply to look at trends which display a mixture of human emotional sentiment and fundamental health surrounding the company.
As I discussed in my long-term analysis of the DJI, crashes are often correlated with large deviation from moving averages (in this case I'm using 25M and 150M moving averages). The IXIC hasn't even hit the 25M moving average in over 6 years, and is well above it currently.
Another thing I want to look at is the nature of the run leading to a drop, and what it has looked like historically. Looking at the dotcom bubble, we see massive runs up before ultimately the realization that everything (for the most part) was getting overvalued due to emotionally driven and speculative trading. We see this less so with the 2008 crisis, but the dip is more pointed, like a triangle (or one of these symbols ^), as opposed to rounded like we see with a mini bear market. Currently IXIC looks more pointed (I'm sure there's a better term for "pointed", but you get the idea).
The last thing I noticed was that there was large deviation from the SPX during the internet bubble, and once it popped, they were congruent once more.
What I'm doing to prepare / be cautious of a potential dip: I haven't been fully invested since I added more money a few months ago. I am playing relatively safe and locking in gains pretty early. This has allowed me to make some small gains even throughout this shaky market. I would cite percentage gains but It's a little complicated since I just added money, it would get skewed, but I am indeed in the positive for the month, and for the last two months, despite the turmoil surrounding the market. If you don't count the added money, I'm up about 7% in the last 2 months. Currently I am completely uninvested as I expect some more pullback.
Note: I copied the idea of notating the full corrections and mini bear markets as red and blue, respectively. I've linked that idea below.
What do you guys think?
-Kristian
The red boxes indicate major pullbacks, the blue boxes representing short bear markets. One thing to note is that the bear markets indicated in blue are tradable, whereas the major pullbacks in red really aren't. Through this analysis I'm attempting to determine how much longer the Nasdaq/S&P 500 as a whole will remain tradable in the near future.
Throughout this, I will not be focusing on fundamentals, rather technical and trend analysis. My personal philosophy is that it doesn't matter how healthy the company, humans are emotionally driven (I say this despite the fact that the majority of trades are executed by artificial intelligence/bots, but who made those?). I prefer simply to look at trends which display a mixture of human emotional sentiment and fundamental health surrounding the company.
As I discussed in my long-term analysis of the DJI, crashes are often correlated with large deviation from moving averages (in this case I'm using 25M and 150M moving averages). The IXIC hasn't even hit the 25M moving average in over 6 years, and is well above it currently.
Another thing I want to look at is the nature of the run leading to a drop, and what it has looked like historically. Looking at the dotcom bubble, we see massive runs up before ultimately the realization that everything (for the most part) was getting overvalued due to emotionally driven and speculative trading. We see this less so with the 2008 crisis, but the dip is more pointed, like a triangle (or one of these symbols ^), as opposed to rounded like we see with a mini bear market. Currently IXIC looks more pointed (I'm sure there's a better term for "pointed", but you get the idea).
The last thing I noticed was that there was large deviation from the SPX during the internet bubble, and once it popped, they were congruent once more.
What I'm doing to prepare / be cautious of a potential dip: I haven't been fully invested since I added more money a few months ago. I am playing relatively safe and locking in gains pretty early. This has allowed me to make some small gains even throughout this shaky market. I would cite percentage gains but It's a little complicated since I just added money, it would get skewed, but I am indeed in the positive for the month, and for the last two months, despite the turmoil surrounding the market. If you don't count the added money, I'm up about 7% in the last 2 months. Currently I am completely uninvested as I expect some more pullback.
Note: I copied the idea of notating the full corrections and mini bear markets as red and blue, respectively. I've linked that idea below.
What do you guys think?
-Kristian