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I’d like to make a few more comments on the weekly chart of the Nasdaq
Composite index you see below.
In April 2005 the index made a low at the 1890 level and in my view
another bull market upswing has begun from 1890. How far might it carry? We three previous upswings in the
current bull market that can be used as precedents for the current move up. The
first carried the index up 37.3% from the bear market low of 1108 in October
2002 to the 1521 level two months later. The biggest of the three upswings
carried the index up 71.8% from the March 2003 low of 1253 to the January 2004
high of 2153. The last upswing carried the market up 25.2% from the 1750 low in
August 2004 to the 2191 high in January 2005.
If we add these percentage gains to the 1890 low of April 2005 we get
upside targets of 2593, 3245 and 2365 respectively. The third target based on the percentage
gain of 25.2% I think can be disregarded because the corresponding upswing was
actually part of a trading range and I think the market has begun a breakout
move. The first two targets correspond nicely to the targets of 2567 (50% of the
2000 high) and 3120 (1/2 point of the 1108 – 5133 range). So I conclude that the upswing which
began from the April 2005 low will in all likelihood end the bull market and
terminate very near one of the two targets (probably the higher one) cited in my
last post.
