NDX-Prepare for a volatile decade...
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Since the successful breakout of the March 2000 ATH back in Jan 2017; NDX has seen some possible breakout failures however those failures where short lived as seen in the above chart. The failures did occur PRIOR to reaching the psychological level of 10K however those failures never caused a breakdown of a previous low...so in essence it's a great chart showing a bull market making higher highs and higher lows.
In Dec 2023 NDX did indeed break out from an ATH once again! And it is now nearing the next psychological level of 20K. Can we look back at the price action of 2022 and perhaps say...maybe it has begun exhibiting the same behavior it did getting to the 10K level except on a much more lengthly volatile scale?
Some other thoughts to consider-SPX is now at it's psychological level of 5K AND DJI is less than 1% away from Japan's ATH of 38,957.44 before multiple lost decades. As a trader I know "psychological levels" are important so watching how price action responds at, near and around those levels is key. IMO the SPX & DOW's psychological levels are more important to gauge since we are literally at those levels as I type...it's just interesting to think about the volatile trading that occurred in NDX well before the 10K level that makes me also ponder this chart as well.
The chart that gives me the greatest pause about NDX's ability to continue in its current bull market phase, and perhaps, why 2020 has already marked the start of a decade long very volatile market for NDX is the below chart; value compared to growth...VTV/VUG
It's hard not to look at this chart (which has clearly been in a major decline) and think "that certainly looks like one HUGE double bottom forming". And the volatility of the monthly candles/the range from high to low...quite impressive.
As a chartist, the best chart patterns (double tops, double bottoms, cup/handle, H&S or inverse H&S) occur at major bottoms and major tops. Could VTV/VUG be nearing a major bottom? Are we witnessing a huge possible "double bottom" in the making?
Only time will tell which is why I am on the "neutral" side of things for now but on high alert for "breakout or breakdown failures" and will then trade accordingly.
In Dec 2023 NDX did indeed break out from an ATH once again! And it is now nearing the next psychological level of 20K. Can we look back at the price action of 2022 and perhaps say...maybe it has begun exhibiting the same behavior it did getting to the 10K level except on a much more lengthly volatile scale?
Some other thoughts to consider-SPX is now at it's psychological level of 5K AND DJI is less than 1% away from Japan's ATH of 38,957.44 before multiple lost decades. As a trader I know "psychological levels" are important so watching how price action responds at, near and around those levels is key. IMO the SPX & DOW's psychological levels are more important to gauge since we are literally at those levels as I type...it's just interesting to think about the volatile trading that occurred in NDX well before the 10K level that makes me also ponder this chart as well.
The chart that gives me the greatest pause about NDX's ability to continue in its current bull market phase, and perhaps, why 2020 has already marked the start of a decade long very volatile market for NDX is the below chart; value compared to growth...VTV/VUG
It's hard not to look at this chart (which has clearly been in a major decline) and think "that certainly looks like one HUGE double bottom forming". And the volatility of the monthly candles/the range from high to low...quite impressive.
As a chartist, the best chart patterns (double tops, double bottoms, cup/handle, H&S or inverse H&S) occur at major bottoms and major tops. Could VTV/VUG be nearing a major bottom? Are we witnessing a huge possible "double bottom" in the making?
Only time will tell which is why I am on the "neutral" side of things for now but on high alert for "breakout or breakdown failures" and will then trade accordingly.
Nota
I just realized I did not include the Sept 2020 breakout; shown now in the chart below:The black circles on this chart indicated previous lows after breakout's. As you can see, 2022 DID produce a breakout failure of the Sept 2020 ATH however it did NOT close below the Sept 2020 low and therefore a "breakdown" did not occur. Yes, it got really, really close and even got below the low on an intra-month basis however a breakdown only occurs upon a monthly "close" below.
Nota
In fact, looking at the above chart and the black circles you can see how after a breakout failure has occurred; the previous "low" (black circle") does get breached intra-month but by month's end the chart was "saved" by closing the month above the previous low and then off to the races.
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