Tech stocks in the US are clearly the favourite talking topic amongst stock investors. Those who are invested are more than happy with the gains so far but feel there is a lot more room ahead. Those who are not invested are talking about Price Earning (PE) multiples and reminders of the collapse in 2000. Let us see what the charts are suggesting.
Let us first see the monthy charts of NASDAQ Composite with a 12 month simple Moving Average (MA). As shown below the 12 month MA has given very clear entry and exits over that past. Price is above the moving average which suggests we stay long as there is potentially larger moves ahead.
The monthly Moving Average Convergence Divergence (MACD) Zero line crossover which is a longer term trend following indicator also is clearly bullish.
Let us have a look at the shorter term daily charts – price is above 21, 34, 55 and 89 moving averages. A break below 55 moving average will be the first sign of caution. Till then stay long or be wrong!