Nasdaq Barometer and Predictions

Discussion in 'Stocks' started by marketbarometer, Jan 20, 2007.


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    - I have created a weekly technical chart of the Nasdaq Composite going back to 2004.

    - My prediction is that the Nasdaq will most likely consolidate within the current range. It may briefly make a new top, however, I do feel that the top was made at 2508.93

    - If the pattern continues, then the index will make a classic V-Bottom. The bottom will be made in the 2100-2300 range before turning around.

    - The trend is generally up and does not mean the start of a bear market, however, the seasonal pattern remains consistent. The seasonal pattern dictates a correction to the bottom line.

    - Please keep in mind that the technical chart spans 3 years. 1 candlestick is 1 week of time.

    - The reasons why I feel a top was made at 2508.93 is because the Apple IPhone introduction had artificially propped up the index at the start of the year. Companies usually deliver conservative guidance and a percentage will even disappoint during the first of the year conference calls. This will ultimately lead to generous sell-offs of the common stock.

    - Great conference calls that did not seem to work out this week:
    -GE- Down over 2%
    -IBM- Down over 3%
    -AAPL- Made an intraday high of over 99 dollars and now trades at 88.50, 12% off that high in a few days.
    -CAL- Traded at a high of 51 dollars and then the conference call comes, closes at 48.13 on Friday. 6% loss

    - Bad conference calls that resulted in a great selloff:
    -CWTR- Down over 18%
    -RACK- Down approximately 50%

    Conclusion- We are entering a period where the overall market appears tired and the seasonal factors dictate that a correction to the bottom-line will occur. Any bad news will be followed by significant sell-offs. Even good earnings calls that beat the street's estimates may be followed by modest sell-offs.

    Investors and traders should exercise caution during this time and know that the theme that worked last year may not work this year.

    Dr. Michael Roberts