The NASDAQ Composite continues to find upward momentum. Speculators who have ventured forth and assumed gravity would suddenly deflate the index and send it back to earthbound levels have been stunned and likely bruised if they have attempted to sell. A gain of 46% has been made the past year of trading; the NASDAQ was trading at a juncture of approximately 7748.00 in late August of 2019.
There are some analysts who believe the NASDAQ Composite is a bubble and have said the rise in the index reminds them of the Dot.com bubble which burst in 2000. While it is true that price discovery is a guessing game for many in the world of corporate finance as the effects of coronavirus remain hard to quantify, standing in front of the oncoming train and believing it will stop without running you over could prove to be a costly mistake. The trend is your friend should be a mantra that speculators repeat consistently if they are considering a selling position of the NASDAQ Composite. Because until the famed tech index runs into resistance and begins sees sustained selling, buying the NASDAQ Composite appears to be the only logical trading position.
What could go wrong? What could trigger a downturn which hurts the NASDAQ Composite and sends it into a spiral which will begin to actually test support levels repeatedly and cause enough fear in the marketplace to reverse this bullish momentum? The US election looms for President in November and a win for the Democrats on the surface appears to frighten many financial institutions. However, President Trump has had plenty of public battles with technology companies, so a defeat for the Trump administration may actually not hurt the NASDAQ as much as it would the S&P Index.
As August trading ends, traders should be aware there are hurdles the NASDAQ Composite could be confronted by and cause selling. The possibility exists that financial institutions will cash in profitable positions which could cause a bearish trend to emerge. However, is this likely in the short term? The answer is probably no. Financial institutions tend to follow trends and march in parade formation. It is unlikely one of them will step out of place while everyone else is continuing to buy into the marketplace. Corporate officers and managers within financial institutions do not want to be blamed for taking profits off the table too soon, particularly when their competitors continue to follow a positive trend and brag about results.
As the NASDAQ Composite trades within record territory looking for reversals to enter a buying position in the market can prove difficult. Speculators trading CFD’s need to use their leverage wisely and they must practice risk management. Yes, even the NASDAQ Composite has negative trading days and can sour the day of traders who expected a quick and profitable short term position to emerge.
The NASDAQ Composite remains a compelling buying position. Traders certainly need to be careful as the index trades within record territories, days where profit taking is strong will test speculators emotionally. However, looking for sustained selling from the NASDAQ Composite in the short term could be like chasing a rainbow, a waste of time. Traders should continue to nibble at the NASDAQ Composite with solidly crafted limit orders and also have the ability to know when to cash in profits if they are made. While traders may be tempted to follow the bullish trend endlessly, less well funded speculators are often best served by cashing in winning positions and not allowing greed to blind them and watch profits disappear.
NASDAQ Composite Index Outlook for September:
Speculative price range: NASDAQ Composite Index 11,050.00 to 12,200.00
Support at 11.050.00 may prove to be solid, but if broken the NASDAQ could fall to 10,700.00
Resistance at the 11,500.00 target could prove strong psychologically, but if a bullish trend gains momentum the 12,00.00 juncture may be the next logical spot bullish behavior dream about.
