Nasdaq Nears Test of 2000 High


The monthly bars in the chart below shows the Nasdaq Composite ending the week just 177 points (3.5%) from its March 2000 intra-day high at 5132. [It's only 93 points (1.9%) from its 2000 closing high at 5048]. There's little doubt that it will reach that major milestone in short order. The question is what will happen when it gets there. It's not unusual for a major index to encounter some profit-taking when it reaches a major previous peak. But I doubt it will mark a major top. Although it's currently the only U.S. stock index that hasn't hit a record, that doesn't mean that it hasn't done as well as the others. It's actually done much better. It just had more ground to make up. The Nasdaq lost nearly -80% between 2000 and late 2002, while the S&P 500 and Dow lost -40% and -20% respectively. Since the 2002 bottom, the Nasdaq has gained 320% versus an S&P 500 gain of 160% (the Dow rose 140%). Since the spring 2009 bottom, the Nasdaq gained 260% which outpaced an S&P gain of 187% (and the Dow's 156%). That stronger Nasdaq performance can be seen by the rising Nasdaq/SPX ratio (gray area) since the 2002 and 2009 bottoms. The fact that the technology-dominated Nasdaq is leading the market higher argues for continuation of the secular bull market. So does stronger action in foreign markets.

- John

John Murphy
About the author: is the Chief Technical Analyst at, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus