9:00am (EST)
Whew!
It’s been a long journey folks, but we finally made it.
We have been in a choppy, range bound market since the February highs but the action from last week and yesterday have put the major indexes to fresh 3-year highs. These trading ranges are tough and can be hard to figure out but when you do your homework and have a trading plan it’s often best to stick with it.
The other important part of trading is forecasting what others don’t see and keeping your emotions in check no matter what the environment is like.
Tuesday’s market action has pushed the market to the top of our near-term ranges and after calling for a super-sized rally back in October that we said would last until April, it just feels good that we are finally here. Before we go into the numbers and today’s interesting tidbits, we wanted to see what our own thoughts were back in October which helps us determine where the market could be headed over the next 6-12 months.
From October 14, 2010 when the Nasdaq was at 2,425:
“Good earnings, China, and the Fed’s backing are a powerful recipe…
…the all-time high for the Nasdaq is 5,132 which was hit on March 10, 2000. The index closed at 5,046 and 5,048 on consecutive days at the peak. Talk about a quick “double top”. It was all downhill from there of course and here we are 10 years later.
The most amazing thing about the Tom Petty freefall was the fact the index fell a stunning 80% over the next 2 years. Yep, after its peak, the Nasdaq tanked to a low of 1,109 on October 8, 2002 and 1,108 two days later. Talk about a fast “double bottom”.
History is often a good indicator in a lot of forecasts along with charts and if we had to make a prediction, it looks like Tech (Nasdaq) could test 2,600 before another ferocious battle takes place – – if the bulls continue to blow off more steam a decade later. At any rate, at least you got a free history lesson today on the highs and lows of the Nasdaq.” (END)
Well, the Nasdaq was broke the 2,600 level by Christmas and in January we called for a possible run to 2,850 with a chance at 3,000.
While there was no way anyone could have predicted the geopolitical turmoil and the devastation that took place in Japan, it is no surprise that we are right at our targets with Ben Bernanke on deck. We said yesterday that the dude will have to be sharp as a tack because the entire financial WORLD will be digesting every single word he utters today. E.F. Hutton? Multiply that by a million as far as Bernanke speaking.
In mid-January we went on record and gave our 2011 year-end targets of Dow 14,000, S&P 1,500 or Nasdaq 3,400. Most of the Wall Street pros and money managers have been calling for a correction since late January/ early February and again on the March lows but they have been wrong and might be forced to chase on a breakout from here.
The good news is the market is still in a powerful rally that is going to last through 2011 unless Ben Bernanke blows it. Sure, there will be pullbacks, maybe from here, as Ben will face some tough questions today. He has had the printing presses on for quite some time as the American dollar tanks and remains in the toilet. As some point, when the presses run out of ink, it will mean lower stock market prices but it all depends on Bennie and the Rates.
One thing is for certain, today will be interesting TV.
As far as where we stand, let’s go over yesterday’s numbers and our current trades…
To read more, click here.
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