As technology stocks push higher and help power the advance for the NASDAQ Composite, its time to take a look at the progress of the index.
Is there going to be the usual Santa rally this year? Well, some of those answers may be found in an article I wrote back in February. I wrote the article based on what looked like a 15 year Cup With Handle chart pattern I noticed.
In that article, I discussed the potential of the breakout from the Cup With Handle chart pattern. A 7,010 price target was calculated for the breakout. Here's how the 7,010 price objective was calculated in that article:
Let's calculate a 34% rise from the top of the right side of the Cup. The top of the right side of the Cup is 5,231.94; multiply that amount by 34% and the product is 1,778.86. The 1,778.86 represents the breakout amount. Now add that amount to the top of the right side of the Cup pattern. The result is a price target of 7,010.80.
A 34% rise that I used in that calculation is the "standard" or "typical" breakout for the pattern. And while the 34% increase is a great place to start for price objectives, remember that these are just guidelines and not absolute price targets. When looking for specific price targets, I prefer the use of Fibonacci charting tools and candlestick patterns. The 34% guideline sure set us on the right path, but let's calculate some secondary breakout price targets now that there is another 9 months of breakout activity.
NASDAQ Composite (COMP)
This first chart for the NASDAQ Composite (COMP) is a 5 year monthly candlestick chart. This chart shows the index is currently at the 6,889 price level, not too far from the 7,010 target calculated in the February 2017 update.
With long-term buying momentum that is continuing to increase, the chances for a continued rally through the end of the year look very good. That would include a Santa rally. The…...
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