Can we time the NASDAQ?
It would appear so. The NASDAQ has a clearly repeatable path that could be traded for profit. The graph shows the NASDAQ since 2014, with a trend channel plotted to show just how steady and contained the trend has been. The dotted line is halfway in the channel, and therefore represents the trend average.
Prices above this line have a greater chance of falling back to the average, and prices below it have a greater chance of rising above it. Ideally one would buy when the lower channel is crossed, and exit and when the upper channel is crossed. The blue price and time ranges show the price rally from middle to upper band. They also show the number of days to get there. So 7-10%, over 25 days (approximately) before the NASDAQ is overbought and poised to retreat.
Today we are 6% above the average, and 15 days in. Prices could rally another 2% over 10 days to complete the cycle, and cross the upper channel. When they fall it is -5% to the average, and -10% to the lower channel. The key is to not to perfectly market-time, but push the odds statistically in your favour. Therefore as a trader I would be selling out of my NASDAQ stocks, with buy limits at or below $78.
Prices above this line have a greater chance of falling back to the average, and prices below it have a greater chance of rising above it. Ideally one would buy when the lower channel is crossed, and exit and when the upper channel is crossed. The blue price and time ranges show the price rally from middle to upper band. They also show the number of days to get there. So 7-10%, over 25 days (approximately) before the NASDAQ is overbought and poised to retreat.
Today we are 6% above the average, and 15 days in. Prices could rally another 2% over 10 days to complete the cycle, and cross the upper channel. When they fall it is -5% to the average, and -10% to the lower channel. The key is to not to perfectly market-time, but push the odds statistically in your favour. Therefore as a trader I would be selling out of my NASDAQ stocks, with buy limits at or below $78.
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