Will These Explosive Nasdaq Gains Continue?

Explosive Nasdaq Gains in 2023

As of this writing, the Nasdaq (NDX) is up 39% year to date. This move has occurred mainly on the backs of key mega-cap names, including Microsoft (MSFT), Tesla (TSLA), Apple Inc. (AAPL), Netflix (NFLX), Nvidia (NVDA), Advanced Micro Devices (AMD), and Meta (META).

Check out the chart of the NDX since January 1st, 2023, below:

 

Of course, the year is only almost halfway over, but comparing the current move in the Nasdaq to historical gains over a full year means that this year (so far) is one of the strongest year-to-date gains in the index’s history. The most significant percentage gains in the Nasdaq occurred in 1986 (69%), 1991 (47%), 1999 (85%), 2003 (50%), and 2009 (43%).

So, where do we go from here? Can the index continue higher, even though it’s already up almost 39%?

Yes, it can. Let me show you why.

Let’s look at my long-term price targets on the monthly chart.

Nasdaq Futures – Monthly Chart

 

This is a picture-perfect bullish chart. It has a gorgeous trend until the very clean pullback and has created a cup and handle pattern, one of my favorites! The TrendStrength candles shifted from green, to yellow, to red, and then back to yellow and green (buy signal) again. At this point, it’s breaking out in a blow-off top type of fashion. When you see a chart pattern like this, the most obvious target is the return to previous highs at 16,767.50. The next targets are going to be at the Fibonacci extension zones. In this case, that would put the price targets at 18,476 and 20,650. To round those out to make them even better price targets, you overlap those targets with key psychological values. That would mean I’m targeting 18,500 and then 20,000 in the Nasdaq.

Want to learn more about Fibonacci levels, including why I use them, how to draw them, and how to interpret them? Check out this video on Youtube! Subscribe to be alerted when new videos are published. 

The Next Big Movers

Is it possible for the Nasdaq to reach a price point of 20,000, after falling to a low of 10,500 during the low of the bear market? Yes, it is.

Many analysts have been stuck on the fact that this Nasdaq move has been caused largely by seven stocks. While this is the case, each one of these stocks all have very bullish patterns, like Microsoft, demonstrating that I believe they will keep going. 

But that’s not all. What about all of the stocks that have been beaten down? What about ARKK stocks, semiconductors, cyber security, cloud, and software stocks? Otherwise known as the rest of the companies that make up the Nasdaq.

I have said more than a few times that I don’t believe many of the Dot.com 2.0 stocks like Peloton (PTON), Teladoc (TDOC), Chewy (CHWY), and more will ever return to previous all-time highs, but this isn’t the case for the likes of companies like Adobe (ADBE), Oracle (ORCL), Salesforce (CRM), and more. And those companies can continue assisting the Nasdaq’s strength higher as they recover. This goes for cyber security stocks as well.

The AI craze has taken over and with good reason. But, a continued cloud/cyber security/semiconductor will continue boosting spaces that are still beaten down.

Oracle traded to new highs just before earnings, and despite the explosive move pre-earnings, it has continued even higher.  I posted about Oracle just before earnings with my upside price targets that are now being met. 

Adobe (ADBE) Earnings in Focus

All of this being said I have Adobe on my mind.

Despite continually beating EPS estimates with wide margins, Adobe got hit hard during the bear market. But it’s making a comeback, and it deserves one. It’s not one of the Teladocs of the world.

Check out Adobe in the Hot Zone below:

Adobe Inc. Daily Chart

 

Adobe Hot Zone Stats:

ADBE has earnings on 6.15.23 after market close.

  • The MMM is $35.76 which is equal to about 7.4%.
  • Over the last 12 quarters. ADBE has beat estimates 11/12 times.
  • They have a history of beating EPS estimates by a wide margin.
  • However, only 3/8 past gaps post-earnings have been higher, though the moves were more positive in the last 2 quarters.
  • ADBE has 167% implied volatility and is at the quarter’s high.

I like Adobe, and I’m a shareholder. I am also averaging in on this company. It also has a bullish monthly chart like the other mega-caps I mentioned above. With the very high implied volatility, the market is pricing in a big move, but that also opens the door for a premium selling opportunity as well.

So, what does all of this mean?

The Nasdaq is extended in the short term, but the technicals and fundamentals are sound in the long term. My focus is continuing to average in on long-term investments and trade the bullish trend in the near term. Earnings demonstrate which companies will recover and which never will. Trading earnings in this environment provides premium selling opportunities due to the year’s big moves. And guess what is coming soon? Another earnings season, which I’m very much looking forward to trading with you.

 

 

 

 

 

 

P.S. Want to learn more? Click here to learn more about my favorite Earnings Stats tool, the Earnings Hot Zone. 

 

 

 

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