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Long term Nasdaq prediction chart  (February 2002)

Here is the updated long term prediction chart for the Nasdaq.
The previous chart , made in November 2000 ( Click here ), has been very useful.
Now we can try to look a little further ahead.

As predicted the Nasdaq has fallen back into the long term uptrend channel since the year 1973.
We are now very close to the middle of the trendchannel, near 1750.

Does this mean the decline is over?
I don't think so. Excesses of this magnitude ( the 2000 blow off top) rarely stay without long term economic consequences..
It is very likely that after rising far above the long term trend channel in 1999 and 2000, the market will move into the other extreme and fall below the channel somewhere during this decade...

This may seem to be a very pessimistic view, but let's have a look what we can see in the chart.

The Nasdaq seems to be moving in a steep downtrend channel since the year 2000 peak.
The market is now trying to work its way up towards the downtrend line "D" in the chart. Only if this line is penetrated to the upside, we can be more confident that the low is behind us.
If the market does not succeed to break above this trendline before the end of the year 2002, we will be left with a giant head and shoulders pattern (see S1 - H - S2 ), usually a very bad omen.
In that case we have to watch the all important major support level at 1400. If that level is taken out , we are likely to fall below 1000 by the year 2004.
Needless to say that this would probably be accompanied by severe economic problems.

We will regularly look back to the evolution of this chart in our free Newsletter


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