Image of the day

From the
ATWB Customer Gallery

Great Horned Owl

My Account

New to Astromart?

Register an account...

Need Help?

Fun with charts -- 30yr trends & ranges

Started by pkamm, 02/16/2004 08:51PM
Posted 02/16/2004 08:51PM Opening Post
This was a fun little graphic manipulation. Took the 30-year chart of the Nasdaq composite on a logarithmic scale. Digitally sheared the image to bring the long-term uptrend to a flat horizontal orientation. From this, one can draw straight horizontal lines connecting upper and lower extremities of said index representing maximal deviations from the long-term trend centerline. If I've even drawn it roughly right, the Nasdaq's current position is right around that center trendline right now. What this would imply is that the rally of the last year has now fully relieved the deeply oversold condition of late 2002. Similar past oversold bottoms and recoveries in 1973-74 and 1990-91 were followed by corrections, one sharp (1974) and one barely perceptible (1991) before continued rallying. The recent rounded 'humping' pattern being generated by the nasdaq last few weeks has been relieving the overbought condition of the rally like air being let ever so slowly out of a tire. There may be a correction in the offing even so, but it's hard to count on it happening at this point. The market could simply asymptotically 'revert to the mean' onto the center trendline.

Attached Image:

pkamm's attachment for post 13245
Posted 02/16/2004 09:25PM #1
Note also, that once a bear-market bottom is reached, it takes only about a year to run from the bottom of the channel to the mid-point (i.e. 'revert to the mean'), but then it takes another 7 to 8 years to run from that midpoint to the top of the channel (where 'optimistic peaks' occur).