Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Wednesday, August 23, 2006

Will the NASDAQ be 50% higher in 6-12 months?

I posted up a chart looking at the relationship between the NASDAQ and crude oil contracts a couple months back in an entry titled “Can the NASDAQ – Crude Oil Index predict Bulls & Bears”.



The combo index highlighted the relationship of the two indexes and actually told us on a higher level when and where the market was making rallies or starting major down trends over the past 10 years. Visit the link above for a further description of the actual combo index.

As this year moves on, I have noticed that the combo index continues to reach new multi-year lows while traveling below its 200-d moving average. Recently, it started to move north but still lives beneath the moving average and long term trend-line or resistance. I am still wondering if this index is useful and if it can confirm a sustainable rally if it crosses back above the 200-d m.a. and multi-year resistance line.

While reviewing the three year chart, I noticed the spikes in October and was wondering if it will do the same this year since the action is starting to resemble previous years (post bubble burst era). Whatever the case, it will be very interesting to see many indicators move to the positive side simultaneously all confirming a possible rally towards the end of this year. The Stock Trader’s almanac states that mid-term election year lows usually peak 50% higher in the following 6-12 months. We are now in a mid-term election year and several indicators look to be hitting bottoms with an urge to move higher.

So I ask:
Will the NASDAQ be 50% higher in six to twelve month from this year’s bottom?

Only time will tell and I will not know the answer until my most important indicators give me the green light signal to buy heavy on the long side!



Piranha

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4 Comments:

At 11:36 AM, Anonymous Anonymous said...

Chris, my view is this at some point the Indices will start rising and OIL might either stagnate at some levels or the rate of change of price of OIL will be lesser compared to the indices.Do you have longer term charts of oil from say the 1980s?

We will have to wait and see.

 
At 1:13 PM, Blogger Chris Perruna said...

Ten years is long enough for what I am watching but the charts can go back further.

I must ask one thing: What do you base “your view” on?

As we know, markets don’t care about opinions and that is why I try to stay away from predictions and only act on what the charts say. I do have feelings where the market can go but they are meaningless and just an opinion based on bias in my mind.

 
At 9:17 AM, Anonymous Anonymous said...

Chris, I have been reading your comments on your blog and the RD forum logn enough to know you don't care abt opinions :).

I am trying to guess all possible outcomes - seeing which is most possible (and I am generally bullish and as the quote says - “A trader, once in a position, can deceive himself or herself into believing anything that helps reinforce the notion that he or she is right”).

 
At 10:14 AM, Anonymous Anonymous said...

What do you base your view on?

I think prior to this, the previous time when we had talks abt 'peak oil' and higher oil prices was in the 1980s.

That is whay I asked if you had the chart dating back 20 years to see if there is something which can be observed.

As always, market is king. Will listen to the market than trying to stick to my opinion. This is just for research and observation.

 

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