Monday, February 9, 2009

Bulls are running the NASDAQ

The economic down-trend is very much in the news but the current confirmed recovery is not. In my little piece of the internet, I plan to inform readers of the truth. (I'm venting)

OK... here's the data:
The global economy went into a recession (duh). Since this hampers business profits and thus earnings, the markets responded with a sell-off. Looking at the charts, one sees that the NASDAQ formed a bottom on November the 21st. at 1295.48. From there, it went into a bull market and recovered over 22%.

On January the 6th, the day we voted to select a new President, the NASDAQ continued its gains and closed at 1652.38. The next day, markets knew the new Presidents name. NASDAQ sold off all day and closed at 1599.06. That's a bit over 3% loss for the day. The selling continued for 9 days and formed a bottom at 1440.86. In deciding what to do next, the market chopped a lot; fear and indecision ruled.

Since that day, the market retested this bottom and then form a new high. Then a higher low and yesterday, an even higher high. (THIS IS HUGE!)

Higher highs and higher lows is the definition of a bull market my friends, and in the NASDAQ, we now have it!

Bigger Picture Stuff
The S&P broad market index also bottomed on Jan the 21st, recovered, and then tanked after the election. It eventually bottomed and is again reaching for the heavens. Since we lack a higher high, the bull market is not yet confirmed.

Ditto that for the Dow Jones Industrial index.

A Dow theorist will also be interested in the transportation index, so here we go: DJT did form a lower low than Jan. 21 yet is in a confirmed bull market.

Next Step
The NASDAQ index is said to be a "leading indicator" which means that the other indexes should follow its lead. (It seems to be lagging by only a day or two.)

The S&P is said to be a six month leading indicator of the economy; if business recovers, within 6 months, people will be working, companies will be profiting, the economy can be expected to recover.

The Final Step
The final question is on the status of the recession. I am not bold enough to make a prediction. There is so much politics involved that we don't know which way it could go. Oops. the market still contains an unhealthy amount of fear and indecision.

Higher highs and higher lows are, by definition, bullish. This market has confirmed its bullish trend. The worst is behind us if politicians don't muck up the work that millions of smart and energetic Americans are investing in this country's economic future.

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