That's of course the million dollar question and on this post is based on a fractal analysis with the 1998 - 2000 sequence.
As you see today Nasdaq is currently trading within a Channel Up up and down the 1D MA50 (blue trend-line) similar to what it did in 1999. Both Channels formed after a very aggressive rise, which took place after a lengthy yearly period of extreme market volatility (1, 2, 3, 4) where the 1D MA200 (orange trend-line) got breached repeatedly. The 1W MA200 though (green dotted line) remained intact, which is what maintained the long-term bullish trend of the Bull Cycle. In late 1999 after the Channel Up broke upwards, an equally aggressive rise took place that formed the peak of the Bull Cycle and the historic pop of the Dotcom Bubble. The Bear Cycle started and in early 2001 the 1W MA200 broke.
It goes without saying that this is a very simplistic fractal comparison and can't be an investment strategy on its own, but is fundamental/ news framework that led to the 2000 Dotcom bubble much different from today's aggressive economic stimulus?
Let's make an interesting discussion down below!
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TUCM
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Still love the idea. However, what about the following: I doubt that the FED wants a big bubble bursting. Knowing that they have the same data as we are looking at here, do you think it is possible that they want to prevent such big bubble building before it reaches dimensions as in 2000? Dotcom was driven by pure speculation (as far as I know), today´s rally is driven by insane liquidity, therefore it is a (mainly) FED driven rally. Would you, for instance, expect the FOMC tomorrow to announce something that could shake markets in order to force a bigger correction right now to prevent such bubble building and then continue the rally with less pace but more steady?
mrdody2012
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i'm with you there!
kaotic363
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If the fractal plays out then there is 100% upside before a major peak. So 26k on the NDX? Sure I'll take it..
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