2/11/2017 – NASDAQ Composite (COMP) 15 Year Cup With Handle Chart Pattern
It seems as if a lot of articles (for the most part) have had a bullish tone to them lately. I've come up with some significant upside targets for some stocks in articles over the last few weeks. In order for these stocks to continue their bullish breakouts, let's make sure that the main index I follow, the NASDAQ Composite, can support a continued breakout. Let review a possible NASDAQ Composite (COMP) 15 Year Cup With Handle chart pattern.
In times like this I hate not being able to reference articles prior to October 2016. I would like to reference a previous article of mine from about 2 years ago. The article was titled "The NASDAQ Composite's 20 Year Cup Pattern" or something like that. It made no reference to a Cup with Handle because a Handle had yet to form on the Cup. Matter of fact, the right side of the Cup ended up pushing slightly higher after the article before forming its Zig-Zag wave pattern that I predicted with great accuracy.
It really stinks not having that information available at the current time. As most members recall, when I switched to the new web provider I had some backups with error messages due to my previous webhost provider tinkering with my files. That is why I always had so much downtime with them.
To date, I am happy that since the switch effective October 1, 2016 I have not had to deal with downtime for the website but one time, and that was mid-day once during a normal backup on the webhost side. But it does really suck losing my great content from pre-October 2016.
Regardless of the past, it now depends on what the market will do, not what it has done anyways. So let's start with a quick checkup on a chart from that article 2 years ago.
NASDAQ Composite (COMP) 15 Year Cup
The last thing I remember writing from the article slightly over 2 years ago was asking a question. How long is it going to take to develop a proper handle for the Cup pattern?
After some digging through my back-up hard drive, I believe I was able to find the chart from that previous article on the NASDAQ's 20 year Cup pattern. It is time stamped January 7, 2015.
An updated chart for the above Cup pattern can answer my questions from over 2 years ago. Was a handle going to develop on the Cup? If so, how long does it take to develop a Handle for a 15 year Cup pattern? Let's look at the next chart for answers to those questions and then start looking at some upside price targets for the breakout from the Cup with Handle chart pattern.
NASDAQ Composite (COMP) 15 Year Cup With Handle Chart Pattern
So here is an updated 20 year monthly chart that illustrates how the Cup with Handle pattern actually ended up developing. The index hit a low of 4,209.76 during the development of the Handle, just slightly higher than the target point I illustrated 2 years ago.
The above chart looks like the NASDAQ already performed a re-test of the breakout area. It also answers the two questions from my article 2 years ago.
- A Handle is going to develop on the Cup pattern that developed for the NASDAQ Composite
- A Handle for a 15 year Cup pattern appears to have taken approximately 6 months to develop
Let's review the breakout potential using both Fibonacci Extension Tools as well as the average percent increase for a Cup with Handle chart pattern and compare the price targets.
Fibonacci Extension Tools to Calculate Cup With Handle Breakout Potential
Here is the same 20 year chart with a several different colored Fibonacci Extension Tools on it. Notice how the index finally broke through the resistance area from the Doji candlestick pattern back from 2000?
After breaking and closing above the Doji resistance area from the year 2000, the market could be ready for a nice continued advance upwards. It not only broke above the Doji resistance, it went back and re-tested the breakout area.
When I refer to my Thomas Bulkoswki chart book I notice that the average cup performance is an approximate 34% rise from its breakout area. You can also see some of his online statistics for the Cup pattern here.
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.
The calculation from the Cup pattern seems to at least support a move to the green 261.8% Target Line from the Fibonacci Extension Tool. Could it be possible that the NASDAQ Composite is going to blow through the 5,800 price objective that I calculated more than a year ago and recently confirmed? It does seem possible.
NASDAQ Composite - 5 Year Monthly
This chart zooms in to look at the most recent uptrend in more detail. I noticed there was one additional Fibonacci Extension Tool that I should have placed on the above charts.
There are Fibonacci Extension Tools that start to converge around the 7,000 price area. Very interesting.
I haven't yet discussed the MACD Histogram for the index on its monthly chart. The MACD Histogram above reflects increasing buying momentum. And since this is a monthly chart, that is a "longer-term" perspective. Buying momentum that is increasing on a monthly chart typically means good times for the right investments. Even better times for the great investments.
NASDAQ Composite - Summary
While the 5,850 level has been my target for the NASDAQ Composite for quite some time, recent analysis provides support for a possible continued run. This extended run appears to have the potential to reach the 7,000 mark. If that is going to happen, ask yourself, what stocks in the index are going to make that happen?
Instead of the Golden Ratio for Apple in its current uptrend, does it instead reach for the more bullish 261.8% Target Line? Does Facebook's share price rally to some bullish price targets in the $150 & 171 areas that I just calculated today? (Look for that post later tonight!)
For all the stocks that I've written about to reach higher targets, it only makes sense (at least to me) that the markets continue their progression of new all-time highs. If the NASDAQ Composite does blow through the 5,850 area, we are more prepared than most and have some nice upside targets to continue to monitor while others wait for more pullbacks to get in on the uptrend.
Let's discuss this more!! Talk to me in the Idea Chamber.....