|"What a Difference A Year Makes!"
Happy Memorial Day!
Well here we are
Memorial Day weekend. Last year at this time the NASDAQ had dropped 60 days ahead of Memorial Day 2000. It hit a year low of 3042.00, and had begun a run that would see it go up 40% by August 2000. This year, it appears that things are reversed. The NASDAQ already has made that 40% run. Instead of buying up the index big after Memorial Day 2001, could this mean that they SELL IT?
The NASDAQ's year 2001 high is 2892.00. Its low is 1619.00. That means a 50% retrace is 2255.00. The NASDAQ closed under that level on Friday at 2252.00. The key now is a 61.8% retracement - meaning any close under 2105.00 on the NASDAQ, and it should free fall back to 1868.00 area, and could very well break it! What it all could mean is that the next time the NASDAQ closes under 2105.00 it may not stop until it hits 1619.00 again.
New homes sales are way down, interest rates are way low in cycle, and unemployment at 20-year highs. The economy is in big trouble. Bigticket items have already been affected. If consumers won't buy houses with some of the lowest interest rates in decades, then things are much worse than we thought.
I hate to say it, but last May 2000 the NASDAQ went from a 3042.00 (then a year low) to 4259.00 less than three months later. The move was 40%, and it also had an over 40 day FLAG PATTERN along the way. It eventually broke out to 4289.00 a 40% move off its low. To do what? drop 40% from 4259.00 less than 5 months later.
4289.00 - 40% = 2573.00 that leads to another huge drop!
look at this: If the NASDAQ after retracing1619.00 this year, gets back to 2328.00, (about a 40% move up) now drops 40% off that, we find the following:
2328.00 - 40% 1396.00
It makes a lot of sense! The country wasn't near the "R" word in 1998, and the NASDAQ low was1357.00. A near retrace of that low makes sense with the country in its current state.
The DOW is easier. 10300 - 10600 were near a two-year FLAG RANGE. The 9105.00 drop back to 11350.00 this past week is a move of 750.00 over the 10600.00 FLAG area. Now that means that if you add 750 to 10600.00, you also subtract 750 from 9105.00 (the drops out of the flag pattern) meaning the 2 extremes 11350.00, and 9105.00. Subtract 750.00 from 9105.00, and you get 8355.00. Take a look at how in 1998 8355.00 on the DOW acted as support! This year I think they come back from the 3-day weekend and sell the NASDAQ, and the DOW as well.
Look what has already happened:
NASDAQ April 5, 2000 - The day that tech investors said was "The day tech stocks died", 4350 - 3652.00 in less than one day to only come back and close over 4100.00 again.
May 24, 2000 - NASDAQ hits its year low at 3042.00 after dropping off of its April 5, 2000 close by another 1100 plus points!
April 3, 2001- NASDAQ bottoms at 1619.00 after falling in all of Feb, and March 2001 much the way it rose in Feb March 2000.00
May 22, 2001 - NASDAQ hits 2328.00 its 60 day off 1619.00
Do you all see a trend here?
April 5, 2000 drop
April 3, 2001 rise
May 24, 2000 rise
May 22, 2001 drop
See how they are reversed and exactly 2 days apart?
See how its reversed?
So now if that has already happened, and August 31, 2000 was top on the NASDAQ, and things are reversed, then maybe that means that August 31, 2001 will be the bottom?
The way I play it:
NASDAQ closes under 2105.00 this next week. It should retrace back to at least 1619.00. FED or no FED!
2001 DOW & NASDAQ TARGETS:
NASDAQ: 1396.00 (August 31, 2001 and amazingly enough its a Friday! lol)
2 KEY NASDAQ stocks bottom targets:
1 Tech Infrastructure, and one B2C Internet:
August 2001 projected low:
JNPR: $20.00 The move JNPR made of its year low was 28.60. The drop was almost all free fall in late March 2001 from 67.50 down to 28.60. Its latest move was 28.60 - 69.50 - thus breaking 67.50 by 2.00. That should mean JNPR loses its year low of 28.60 by 2.00 's.
EBAY: $22.45 How over done is EBAY? Well last August the NASDAQ traded at 4000 plus, and EBAY traded at 65.00. This year EBAY is trading at 60 plus currently, and the NASDAQ is nearly 2000 points lower! You tell me?
Projected NASDAQ Bottom:
August 31, 2001:
I could be wrong, but tons of research and data says I might be right! I called the NASDAQ top in March 2001. Well not the exact top 5150.00 - I said sell ahead of Abbey J Cohen.
Besides take a look at these 4 stocks and you decide:
The NASDAQ 100 Tracking Stock The QQQ's
The September 2001 QQQ 35.00 puts have huge Open Interest on them. That means 30.00 may come on them by July. That means sub 1619.00! Also take a look at the QQQ June 2001 50.00 Calls. They have a ton of volume, and Open Interest on them. That means 55.00 won't be busted on the QQQ's, and was it? Nope 51.96 high! WOW!
Ok, now don't laugh. Take a look at SRV, STEI, and CSV. These stocks are near three-year lows. They are Funeral Stocks! Yes, I said Funeral Stocks! Even in the worst of economies people still die. Fact of life. Maybe in bigger numbers if they are tech investors, lol. But seriously, look at the 30 day volume on these stocks. See how they have dropped since 1998? Don't forget 1998 was when 3rd world economies were really bad. Then it wasn't our economy but this time it is. They are near 3 year lows! Huge volume on them lately. Ohh and BONDS are bearish again - nobody wants them. When nobody wants something that's when you buy right?
The USA isn't like Japan - well not yet anyway. Lets hope it never finds the decline that the Japanese economy found. I do point out that Japan lowered interest rates to ZERO, and it still saw it economy tank! I am not saying we get ZERO interest rates, but it is a good reminder, and a good point to ponder further.
It's like this: It's not Wallstreet that fuels the economy, its MainStreet, its Ma and Pa, and it doesn't matter if interest rates are 6.75%, 5% 2%. If they don't have jobs they can't take advantage of the rates. Its like someone trying to sell you 20k a car, and taking big money off to get you to buy it. They can take 10k off it, and if you don't have 10k to buy it then what does it matter? Never in the history of the USA's economy has its Energy prices been at 25 year highs, and its unemployment been at 25 year highs, and its long term interest rates been at or near 25 year lows. NEVER!
The last time interest rates basis points were decreased five times in a six-month period? And didn't send the DOW 30% higher in the next six months? 1929 ahead of the Great Depression. Interesting isnt it?
Consumers have already begun to slow their spending! It doesn't matter then if CSCO is seeing a bottom get closer. If Ma and Pa can't afford to heat their apartments, then they can't afford a house according to new home sales in April 2001 or drive a car for that matter. Do you really think it matters what CSCO does? Its not capital spending, and its expansion that leads to recessions, and depressions. Its the consumer they fuel the economy!
Call me, but this last DOW and NASDAQ move that has sent the DOW from 9105.00 to 11350.00, and the NASDAQ from 1619.00-2328.00 (both indexes up 25%, and 40% respectively) set up at the very least by year 2001 end a re-test of each indexes 3 year lows!
I could be wrong, but what if I am right? Consider that before you laugh me off! People did the same thing when I said 5150.00 was about it on the NASDAQ SELL I missed the top by less than 50 points!
More to come
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