Strong Buy initiated on the nasdaq.
I am initiating a 2004 target of 3250 on the nasdaq.(someone has to do it) I have arrived at this target by using the Dow/nasdaq ratio's historical range and action. The 25 year range of the ratio is between 4.5 and 5.5, but it has gone to extremes at long term tops and bottoms. Recently the ratio went to the 2nd highest level ever at 6.33, suggesting an extraordinary level of depression in growth investors. With the dow likely to earn in excess on $700 in 2005, the dow is likely to be as high as 15,000 at year end 2004. The Dow/ Nas ratio is bound to contract, led by a rebound to a more normal level of speculative enthusiasm. With the dow target of 15,000, we can expect that the nasdaq will rally to at least 3250 by year end 2004, stunning the vast majority of onlookers.
It won't be a straight line, and rallies to overbought areas should cause a short term defensive posture. 10% corrections should be bought, and they will be common, with a plan of buying up to a 20% pull back level, and being certain you can hang on through a 25-35% pull back
Just my humble opinion. I have been wrong for a long time, and will be again in the future. |
