Global Markets and Nasdaq Composite Report -A Correction is always better than the Formation of a new Bubble

Recently the US stock-markets have witnessed significant selling pressure along with other major stock-markets around the globe. According to many analysts, the equity markets are overpriced while according to some others the growth in the US economy and the corporate earnings justifies even higher market values. As concerns the bonds market, US bonds are under pressure too and as the hedge fund manager Leon Cooperman said: “Investors buying bonds right now are playing with dynamite”.

In this analysis, we are going to evaluate what happens next regarding the Global Markets and especially as concerns the Nasdaq Composite. Whatever is the outcome of this analysis don’t panic if you want to exit the market, you will have your chance to do it the right way.

Cash will be king again, it always becomes king at the end

According to one of our past analysis (some months ago) we have mentioned that the current bullish circle of the global capital markets is coming to an end. This forecast was based on both fundamental and technical analysis. In addition, we said, “Cash will be king again, it always becomes king at the end”. Fortunately for some investors and unfortunately for many others this forecast becomes true.

What Happens Next regarding the US and the Global Equity Markets

In order to evaluate the current market conditions and to be able to forecast what happens next, let’s see first some important facts regarding the US stock-markets:

(a) Basic Reasons why the US Stock Markets should go up (↑)

√ The US economy enjoys stable growth and looks stronger than ever before, since 2008

√ Unemployment is declining and income is rising

√ US corporate earnings are stronger and according to some analysts there are a lot of investment opportunities left in the market (for example Goldman Sachs' analyst David Kostin)

» Check Goldman’s Recent Report on S&P here

√ There is still excessive liquidity in the market driven by the almost zero interest rates

Read more: Nasdaq Trading Signal October 2014

Nasdaq is on the move and Google is one of the most interesting listings on Nasdaq. Google is the global leader in the web-advertising industry and one of the most innovative large firms in the world. Google’s current P/E ratio at 25.6 may be considered as normal, given the high annual expected earnings growth, for the next five years (12% annual expected growth on average). As concerns Google share price, currently it is moving in a nice long-term bullish trend that we are going to investigate below. But first we are going to evaluate our previous signal on GBP/USD.

Previous Signal on GBP/USD

Google {GOOG} at a glance

Here are Google’s Key Figures

Google Share Price Trend

The master trend for Google’s share is definitely bullish and strong. Before this bull rally ends we are going probably to see Google’s price to $900 or even $1,000. But given the beta ratio of 0.97, Google’s trading is in high correlation with the movement of the Nasdaq Index. Therefore, we should expect fluctuations according to the overall market trend, which currently is strong and bullish too.

Chart: Google’s Share Closing Prices (2004-20013) and TCI Long

Read more: Signal on Google May 2013

TCI Trading Signals and the NASDAQ Composite Analysis for May 2014

“Cash will be king again, it always becomes king at the end”

This TCI analysis concerns the Nasdaq Composite Index. We are going to investigate Nasdaq Composite and forecast its course for the upcoming years. But before investigating further Nasdaq Composite let’s evaluate our previous TCI signal on GBPUSD.

Previous TCI Forex Trading Signal

In our previous trading signal published on April, 28th we have forecasted an uptrend for the British Pound against the US Dollar using the TCI model.

“TCI is a technical analysis model developed 100% in-house by TradingCenter.org”

TCI Indications on Nasdaq Composite for May 2014

As we have mentioned in the past the real power of TCI is its ability to forecast the time pattern. By using the TCI-Short Model (TCI v1.2) we are going to forecast the course of Nasdaq Composite for May 2014. TCI indicates a short-term upcoming bullish market for Nasdaq ending on the 27th of May 2014.

■ Selling Target: 27th of May 2014

Read more: NASDAQ Composite Index May 2014

NASDAQ PATTERN & FORECAST USING HISTORICAL DATA

Nasdaq is certainly one of the most popular and most active stock markets in the world. In this analysis we, are going to investigate the course of Nasdaq Composite Index since 1971 using TCI analysis and we are going to focus on the three bull markets of the past 20 years. Our goal is to determine the duration of the current Nasdaq bull market that started in 2009.

Nasdaq Line & TCI Charts (1971-2013)

The following multi-chart consist of three individual charts:

1) Line Chart on Nasdaq Closings since 1971 (1st in a row chart)

2) TCI Long Chart since 1971 (2nd in a row)

3) TCI Short Chart since 1971 (3rd in a row)

The line chart is based on daily closings prices during the period 1971-2013. The TCI charts may help us measure and understand the Nasdaq historic returns. Here are some general conclusions deriving from the 2 TCI charts:

TCI LONG:

Read more: Nasdaq Trading Signal April 2013

TRADING CENTER INDICATOR (TCI): TECHNICAL ANALYSIS ON DOW JONES INDUSTRIAL

Dow Jones Industrial closed on Friday the 16^th of November at 12,588.31 points. The downtrend which started one month ago still continues. Dow was about 13,661 points in the middle of October 2012, so the drop since then is more than 1,000 points, so far. In order to estimate the duration of that downtrend market we are implementing the TCI Indicator on Dow Jones Industrial and here are some results.

TCI on Dow at a Glance: 

• Dow Price: 12,588.31
• Short-Trend: ↓
• Mid-Trend: Possible Rebound, ↑
• Possible Turnaround Dates: 20th of November / 30th of November

TCI Indicator on Dow Jones

In the table below we may see some recent daily statistics concerning the Dow Industrial, and at the last column we may find the daily calculated price of TCI indicator. As we may easily observe, Dow Jones trade inside a clear downtrend channel. TCI indicator is found today at about -11.02 {based on the closing of Dow at 12,588 points}. Historically that level of TCI has given traders good returns of 5-10%.

Read more: TCI Trading Signal on Dow Jones November 2012

After some time, trading signals using TCI technical analysis system are back in the Trading Center. The current TCI signal concerns Dow Jones Industrial and indicates a possible beginning of a mini-bear market. Firstly here is the signal:

TCI Chart on Dow Industrial since 2002

As we have mentioned already in previous signals, one of the greatest advantages of TCI analysis is the visualization of the results. On the following TCI chart from February 1st 2002 to today (2/13/2013) we may observe the point +10% to often signal mini-bear market corrections of 10%. TCI chart is followed by a line chart of Dow Jones Industrial during the same time period (closing prices).

Read more: TCI on Dow Jones February 2013