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Nasdaq at 7000:  Will it hit 6000 or 8000 first? Nasdaq at 7000:  Will it hit 6000 or 8000 first?

01-16-2019 , 06:13 PM
The NASDAQ is currently trading ~7,000 flat. From here, do you think the NASDAQ will hit 6,000.00 or 8,0000.00 first?

My vote is 6,000.00.

Last edited by Sportsfanx1; 01-16-2019 at 06:36 PM.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 06:24 PM
If you believe in TA then we will hit 2000 before 8000
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 06:35 PM
"Bit of a tech bubble" seems more correct than "similar to the dot-com bubble." During the dot-com bubble the Nasdaq nearly reached 5k...19 years ago.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 06:36 PM
8000
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 06:45 PM
Quote:
Originally Posted by coordi
If you believe in TA then we will hit 2000 before 8000
Quote:
Originally Posted by Dream Crusher
"Bit of a tech bubble" seems more correct than "similar to the dot-com bubble." During the dot-com bubble the Nasdaq nearly reached 5k...19 years ago.
So I edited the intro. Really, the post wasn't about validity/invalidity of TA, but whether people believe the NASDAQ will hit 6k or 8k first?


My position is that it will hit 6k first, because there are similarities to the run-up of 1995-2000 (using TA), similarities in the run up to 2000 political climate (fed, interest rates) and seemingly similarities in the run up to 2000 investing habits (many "average" investors simply buying FAANG--because those tech stocks are just too strong and will always make money) and many large safe "funds" placing large positions in FAANG and tech type NASDAQ stocks). So, my thought is that it will hit 6k prior to hitting 8k. Also, not calling a "tech-bubble" that will mirror 2000--but rather, believing that (from here) there is down trend remaining before any significant run up.

Last edited by Sportsfanx1; 01-16-2019 at 06:55 PM.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 07:10 PM
I'll go with 8,000 and give it about 60% probability of happening this year. Making historical comparisons (technical analysis) to predict a complex system like the financial markets is a fool's errand. Bull case for the Nasdaq is that we are just beginning a technological revolution unlike anything humanity has ever seen. We are still in the early stages of AI, but are on the brink of seeing all driving jobs replaced by technology (5-10 years). The income generated from all that labor will gradually start flowing through companies in the Nasdaq instead.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 07:11 PM
8000
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 07:27 PM
Quote:
Originally Posted by Janabis
I'll go with 8,000 and give it about 60% probability of happening this year. Making historical comparisons (technical analysis) to predict a complex system like the financial markets is a fool's errand. Bull case for the Nasdaq is that we are just beginning a technological revolution unlike anything humanity has ever seen. We are still in the early stages of AI, but are on the brink of seeing all driving jobs replaced by technology (5-10 years). The income generated from all that labor will gradually start flowing through companies in the Nasdaq instead.
I completely agree that we will eventually hit 8000 (again) in the not too distant future. I also agree with your analysis that we are just beginning a technological revolution unlike anything humanity has ever seen. However, a counter point is that couldn't that statement be said at pretty much any point in the last 100 years? For example, prior to the dot-com bubble bursting, weren't people saying "the internet is a technological revolution unlike anything humanity has ever seen" and using that as the basis for investing in anything ".com" related? But even though the internet was a technological revolution unlike anything humanity had ever seen and completely "revolutionized" commerce, there was still a dot com bubble burst....

Anyways, I'm not calling a burst, just thinking that (from here) there is some pull back remaining before the eventual up trend.

And thanks for your analysis!
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 07:47 PM
Quote:
Originally Posted by Sportsfanx1
For example, prior to the dot-com bubble bursting, weren't people saying "the internet is a technological revolution unlike anything humanity has ever seen" and using that as the basis for investing in anything ".com" related?
Yes, that is exactly what they were saying.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 07:56 PM
Assuming a log-normal distribution and using this dataset: http://www.1stock1.com/1stock1_142.htm

Geometric mean of returns = ~1.113
Standard deviation of returns = ~0.244

P(X<=6000) = CDF[LogNormalDistribution[0.113, 0.244], 6/7] = ~0.136785 = ~13.7%

P(X>=8000) = 1-CDF[LogNormalDistribution[0.113, 0.244], 8/7] = ~0.466471 =~46.6%

So you'd have to be pretty crazy to choose 6000 IMO...

Juk

PS: That calculation isn't quite right as it looks like wolfram alpha takes the parameters of the normal distribution for it's LogNormalDistribution[] function, but that's roughly the way to think about this even if it's not quite 100% correct...

Last edited by jukofyork; 01-16-2019 at 08:07 PM.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:02 PM
Quote:
Originally Posted by Dream Crusher
Yes, that is exactly what they were saying.
So I'll mark DC down as 8,000
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:10 PM
Quote:
Originally Posted by jukofyork
Assuming a log-normal distribution and using this dataset: http://www.1stock1.com/1stock1_142.htm

Geometric mean of returns = ~1.113
Standard deviation of returns = ~0.244

P(X<=6000) = CDF[LogNormalDistribution[0.113, 0.244], 6/7] = ~0.136785 = ~13.7%

P(X>=8000) = 1-CDF[LogNormalDistribution[0.113, 0.244], 8/7] = ~0.466471 =~46.6%

So you'd have to be pretty crazy to choose 6000 IMO...

Juk
Yes, but using your first data set, has there ever been a 10 year period of time without a reasonable (10%+) one year pull back? While we did just go from 8,000 down to 6,200 from October 2018 through December 2018, wouldn't the above statistics demonstrate the highly unlikely (and almost impossible) probability of the 10/18-12/18 NASDAQ move? Granted, the volitility during that time frame was highly unlikely (and almost unprecedented).

Anyways, my thinking (which is in the complete minority apparently) is that the recent downtrend isn't over just yet. But, Warren Buffet is most likely correct and the market will separate me from my money as I transfer it to those patient people who are holding.

And again, thanks for the analysis!

Last edited by Sportsfanx1; 01-16-2019 at 08:40 PM.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:26 PM
Quote:
Originally Posted by Sportsfanx1
So I'll mark DC down as 8,000
No, I'm saying 6,000. I guess you have leadership potential in NFLX, AMZN, and MSFT but FB and AAPL have both fallen out of favor and GOOGL is doing a whole lot of nothing.

Really though I think this Chinese slowdown is going to spread to Europe and then to the US then everyone's going to freak out. It could hit 8000 before then but I wouldn't count on it.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:35 PM
Quote:
Originally Posted by Dream Crusher
No, I'm saying 6,000. I guess you have leadership potential in NFLX, AMZN, and MSFT but FB and AAPL have both fallen out of favor and GOOGL is doing a whole lot of nothing.

Really though I think this Chinese slowdown is going to spread to Europe and then to the US then everyone's going to freak out. It could hit 8000 before then but I wouldn't count on it.
Ok, I was reading sarcasm as the opposite. But I completely agree with your thinking on the above points--part of the reason I am of the mind that there will be a pull back before an up trend.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:41 PM
Quote:
Originally Posted by Sportsfanx1
Yes, but using your first data set, has there ever been a 10 year period of time without a reasonable (10%+) one year pull back? While we did just go from 8,000 down to 6,200 from October 2018 through December 2018, wouldn't the above statistics demonstrate the highly unlikely (and almost impossible) probability of the 10/18-12/18 NASDAQ move? Granted, the volitility during that time frame was highly unlikely (and almost unprecedented).
I'm quite a big believer that nearly everybody would be better off if they just assumed the efficient market hypothesis was true, but even if it wasn't I don't think you can make any real inferences about patterns based on such a tiny sample...

BUT: even without any complex calculations, just scanning the list and counting the number of times it's gone >= +14% (eg: 8/7-1) vs <= -14% (eg: 6/7−1); it's a 23:5 ratio.

Quote:
And again, thanks for the analysis!
No problem and if you're interested then it's really just the same sort of method as used to calculate option prices - you can probably find an online calculator that will give you the correct answer (but again you'll have to be careful to note exactly the form of input it expects).

Juk
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 08:57 PM
Yeah, my posting history would indicate sarcasm but no I was serious. That's exactly what I recall people saying back then.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 09:08 PM
Quote:
Originally Posted by Sportsfanx1
I completely agree that we will eventually hit 8000 (again) in the not too distant future. I also agree with your analysis that we are just beginning a technological revolution unlike anything humanity has ever seen. However, a counter point is that couldn't that statement be said at pretty much any point in the last 100 years? For example, prior to the dot-com bubble bursting, weren't people saying "the internet is a technological revolution unlike anything humanity has ever seen" and using that as the basis for investing in anything ".com" related? But even though the internet was a technological revolution unlike anything humanity had ever seen and completely "revolutionized" commerce, there was still a dot com bubble burst....
Yes but pretty much any point in the last 100 years was a good time to buy stocks. There are only a few exceptions in a whole century. I also wouldn't be surprised to see another tech bubble, I just don't think we're seeing anything like that now.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 09:09 PM
Quote:
Originally Posted by Dream Crusher
Yeah, my posting history would indicate sarcasm but no I was serious. That's exactly what I recall people saying back then.
I'd actually say it's more of a 2+2 thing. Anytime someone on here says "Yes, exactly" in response to a post, I immediately imagine an eye roll emoji and sarcasm. If not, you don't know for sure if you're being trolled or not, and I just assume troll.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 09:16 PM
Quote:
Originally Posted by Janabis
Yes but pretty much any point in the last 100 years was a good time to buy stocks. There are only a few exceptions in a whole century. I also wouldn't be surprised to see another tech bubble, I just don't think we're seeing anything like that now.
Yep. As Buffett put it: "Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

I'm just looking to profit (in my long term accounts, not my day trading account) on a downtrend and then the uptrend. Which means I'm greedy.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 09:18 PM
Quote:
Originally Posted by Sportsfanx1
And again, thanks for the analysis!
Here's a simulation that would more closely answer your question about "hitting" one of the values first:

Code:
#include <iostream>
#include <random>

// Number of simulations to run.
const int numSimulations        = 1000000;

// Parameters of the normal distribution (for generating random returns).
const double averageReturn      = <insert value here>;
const double standardDeviation  = <insert value here>;

int main()
{    
    std::default_random_engine generator;
    std::normal_distribution<double> distribution(averageReturn,standardDeviation);
    
    // Stores the count of how many times $6000 vs $8000 was hit first.
    int hit6000=0;
    int hit8000=0;
    
    // Run many simulations.
    for (int i=0;i<numSimulations;i++) {
        
        // Set starting price to $7000.
        double price=7000.0;
        
        // Generate a random walk.
        for(;;) {
            
            // Ramdonly adjust price.
            double randomReturn=distribution(generator);
            price=price*randomReturn;
            
            // Is price 6000 or less now?
            if (price<=6000) {
                hit6000++;
                break;
            }
            
            // Is price 8000 or more now?
            if (price>=8000) {
                hit8000++;
                break;
            }            
        }
      
    }
    
    // Print results.
    std::cout << "Hit $6000 first: " << 100.0*(double)hit6000/(double)numSimulations << "%" << std::endl;
    std::cout << "Hit $8000 first: " << 100.0*(double)hit8000/(double)numSimulations << "%" << std::endl;

}
Just replace the "<insert value here>" with something sensible (it's pointless putting in the yearly values from above; hence why I've not bothered) and then copy into cpp.sh and hit run.

Sadly, I've no data to go off and no idea what sensible values would be ("averageReturn" per tick will be a value very slightly above 1).

Juk
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-16-2019 , 09:25 PM
Quote:
Originally Posted by Sportsfanx1
I'm just looking to profit (in my long term accounts, not my day trading account) on a downtrend and then the uptrend. Which means I'm greedy.
Yeah, but isn't the most rational thing to base your decision off of history (as Janabis's quote points out) and just go long every time?

I'm not trolling here either; I just can't understand how anybody could come to any other conclusion...

Ask yourself this: if this was a poker hand decision and you posted on any of the 2+2 strategy sub-forums, what do you think the consensus would be?

Juk
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-17-2019 , 04:57 AM
I'll guess 8,000.

If 6k is the low
(6,000/7,000) ^ -1 * 7,000 = 8,166 should be the high number if it is balanced perfectly given edge is 0. Since 8,000 is closer to 7,000 than 8,166, 8,000 seems more likely to me.

This works in reverse also. With 8,000 being the high, 6,125 should be the low. Since 6,000 is further from 7,000 than 6,125, 8,000 seems more likely to me.

Also the market tends to increase in the long run, making me lean more toward 8k.
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-17-2019 , 10:25 AM
everyone knows it's going to hit 8000 in the long run. the real question is will it hit 6000 before it hits 8000
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-17-2019 , 02:21 PM
My guess is 8000 and also that it never hits 6000 again
Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote
01-17-2019 , 11:32 PM
Quote:
Originally Posted by jukofyork
Here's a simulation that would more closely answer your question about "hitting" one of the values first:

Code:
#include <iostream>
#include <random>

// Number of simulations to run.
const int numSimulations        = 1000000;

// Parameters of the normal distribution (for generating random returns).
const double averageReturn      = <insert value here>;
const double standardDeviation  = <insert value here>;

int main()
{    
    std::default_random_engine generator;
    std::normal_distribution<double> distribution(averageReturn,standardDeviation);
    
    // Stores the count of how many times $6000 vs $8000 was hit first.
    int hit6000=0;
    int hit8000=0;
    
    // Run many simulations.
    for (int i=0;i<numSimulations;i++) {
        
        // Set starting price to $7000.
        double price=7000.0;
        
        // Generate a random walk.
        for(;;) {
            
            // Ramdonly adjust price.
            double randomReturn=distribution(generator);
            price=price*randomReturn;
            
            // Is price 6000 or less now?
            if (price<=6000) {
                hit6000++;
                break;
            }
            
            // Is price 8000 or more now?
            if (price>=8000) {
                hit8000++;
                break;
            }            
        }
      
    }
    
    // Print results.
    std::cout << "Hit $6000 first: " << 100.0*(double)hit6000/(double)numSimulations << "%" << std::endl;
    std::cout << "Hit $8000 first: " << 100.0*(double)hit8000/(double)numSimulations << "%" << std::endl;

}
Just replace the "<insert value here>" with something sensible (it's pointless putting in the yearly values from above; hence why I've not bothered) and then copy into cpp.sh and hit run.

Sadly, I've no data to go off and no idea what sensible values would be ("averageReturn" per tick will be a value very slightly above 1).

Juk
Volatility is not static. A better simulation would simulate daily movement with a volatility equation.

In any case, option deltas suggest 6000 is more likely (unsurprisingly):

Nasdaq at 7000:  Will it hit 6000 or 8000 first? Quote

      
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