Double in Two Years Frothy?
The Nasdaq has now ran from the very round 10000 number at the start of 2023 to sniffing out 20000 this past week. Along the way bullish candlestick patterns have aided long term investors where they could lean in on their long exposure. The last two occurred at the rising 50 WEEK SMA and we are now nearly 3000 handles above that secular line. Bearish patterns have been mixed in the success with a bearish evening star pattern completed the week ending 7/19 resulting in a 16% haircut, but the bearish dark cloud cover candle the week ending 11/15 that slipped more than 3% displayed absolutely no downside follow through. The MONTHLY chart shows it totally ignoring the doji candles in August and October, and shwoing how less reliable the dubious candles are in an uptrend, compared to the bullish ones in a downtrend. Notice the negative divergences but these should not be acted upon until PRICE confirms weakness, as that action can go on for years. As someone who has an affinity for round number theory (Bitcoin 100K, dollar bouncing off par in, and TLT reversing there) I am not necessarily calling for a big reversal here, but be vigilant. Salty investors are always more concerned about the downside. Software continues to be firing on all cylinders and the semis feel like they are wanting back in the mix. That would be a lethal combo going into 2025. Just beware things always feel rosy at the top. Will that be very soon, or months out on the horizon?