Real NASDAQ (Inflation Adjusted NASDAQ)
The black line in the chart represents the Real NASDAQ. The Real NASDAQ is the
NASDAQ Composite, adjusted for inflation. If you look at the nominal NASDAQ (gray),
you will see that from 1975 through 2000 the NASDAQ rose 84 fold, from 56 to 4696.
But that's not the whole story. Inflation raged through much of that period... reaching
an annual rate of over 14% at some times. The Real NASDAQ rose 23 fold from 47 to
1085 during that period. So, while the NASDAQ was roaring upwards, U.S. dollars
were losing purchasing power.
If the stock market gains 4% next year, and inflation is 14%, the stock market will
actually lose 10% in purchasing power. The black line shows the value of the
NASDAQ in real (inflation adjusted) dollars.
Secular Trend Indicator (NASDAQ)
ForecastChart.com's Secular Trend Index is shown in green and red. Green is bullish.
Red is bearish. A Secular Trend is a trend that lasts over five years. The NASDAQ
Composite Index came into existence in 1971. It experienced a severe Bear Market
during its first 3 years. The NASDAQ then experienced a twenty-six year Secular Bull
Market from 1975 through 2000. The NASDAQ entered a Bear Market phase in 2000.
ForecastChart.com's Secular Trend Indicator is designed to focus on the root cause
of stock market strength and economic health. The Indicator is currently
Bearish. It is a very Long Term Indicator. If correct, the stock market and the
economy will struggle for many years from the date that it turned Bearish.
A bearish Secular Trend Indicator doesn't suggest that the market will not experience
powerful up markets. It does suggest that up trends lasting two or three years will
relinquish those gains in the years that follow. In such times, crises will be followed by
recovery. Recovery will be followed by crises.
During each crisis, the government will take many actions designed to improve the
situation. These measures typically include lowering interest rates, making it easier to
borrow money, reducing taxes, stimulus bills, and etc. These measures will most likely
provide relief from the symptoms of a diseased economy but not a cure.
ForecastChart.com's Secular Trend Indicator is designed to gauge the state of the
underlying cause of economic weakness. When the indicator turns Bullish, hopefully a
very long and powerful Bull Market will follow. The Bull Market of 1975 -2000 is one
such example.
Expectations
ForecastChart.com's Secular Trend Indicator was designed to provide clues to the
future from the annals of history. The core of this timing system is a versatile model
that searches for major turning points in the NASDAQ. Analytical equations were
crafted to provide an objective, unemotional LONG TERM stock market indicator. The
Secular Trend Indicator went live July 13, 2010 after being back-tested to 1972. The
apparent correlation between the indicator and the stock market in the chart above is
evidence for the value of the indicator. However, the objective investor must accept
the very real possibility that the apparent correlation may be the result of coincidence
or a flaw of some sort. If the correlation existed in the past, there is no way to know if
the correlation will continue in the future. To foretell the future is not within the grasp
of mere mortals. This indicator is no exception to that word of wisdom.
The black line in the chart represents the Real NASDAQ. The Real NASDAQ is the
NASDAQ Composite, adjusted for inflation. If you look at the nominal NASDAQ (gray),
you will see that from 1975 through 2000 the NASDAQ rose 84 fold, from 56 to 4696.
But that's not the whole story. Inflation raged through much of that period... reaching
an annual rate of over 14% at some times. The Real NASDAQ rose 23 fold from 47 to
1085 during that period. So, while the NASDAQ was roaring upwards, U.S. dollars
were losing purchasing power.
If the stock market gains 4% next year, and inflation is 14%, the stock market will
actually lose 10% in purchasing power. The black line shows the value of the
NASDAQ in real (inflation adjusted) dollars.
Secular Trend Indicator (NASDAQ)
ForecastChart.com's Secular Trend Index is shown in green and red. Green is bullish.
Red is bearish. A Secular Trend is a trend that lasts over five years. The NASDAQ
Composite Index came into existence in 1971. It experienced a severe Bear Market
during its first 3 years. The NASDAQ then experienced a twenty-six year Secular Bull
Market from 1975 through 2000. The NASDAQ entered a Bear Market phase in 2000.
ForecastChart.com's Secular Trend Indicator is designed to focus on the root cause
of stock market strength and economic health. The Indicator is currently
Bearish. It is a very Long Term Indicator. If correct, the stock market and the
economy will struggle for many years from the date that it turned Bearish.
A bearish Secular Trend Indicator doesn't suggest that the market will not experience
powerful up markets. It does suggest that up trends lasting two or three years will
relinquish those gains in the years that follow. In such times, crises will be followed by
recovery. Recovery will be followed by crises.
During each crisis, the government will take many actions designed to improve the
situation. These measures typically include lowering interest rates, making it easier to
borrow money, reducing taxes, stimulus bills, and etc. These measures will most likely
provide relief from the symptoms of a diseased economy but not a cure.
ForecastChart.com's Secular Trend Indicator is designed to gauge the state of the
underlying cause of economic weakness. When the indicator turns Bullish, hopefully a
very long and powerful Bull Market will follow. The Bull Market of 1975 -2000 is one
such example.
Expectations
ForecastChart.com's Secular Trend Indicator was designed to provide clues to the
future from the annals of history. The core of this timing system is a versatile model
that searches for major turning points in the NASDAQ. Analytical equations were
crafted to provide an objective, unemotional LONG TERM stock market indicator. The
Secular Trend Indicator went live July 13, 2010 after being back-tested to 1972. The
apparent correlation between the indicator and the stock market in the chart above is
evidence for the value of the indicator. However, the objective investor must accept
the very real possibility that the apparent correlation may be the result of coincidence
or a flaw of some sort. If the correlation existed in the past, there is no way to know if
the correlation will continue in the future. To foretell the future is not within the grasp
of mere mortals. This indicator is no exception to that word of wisdom.
'70 1975 1980 1985 1990 1995 2000 2005 2010 2015 '20
1,000
100
10
10,000
| ForecastChart.com's Secular Trend Indicator (NASDAQ) |
The monthly close of the NASDAQ Composite, from 1972 to present is shown in gray. The
NASDAQ Composite in inflation adjusted dollars is in black. ForecastChart.com's
proprietary Secular Trend Indicator is in red and green. Updated 1/22/2013.
NASDAQ Composite in inflation adjusted dollars is in black. ForecastChart.com's
proprietary Secular Trend Indicator is in red and green. Updated 1/22/2013.
| ... ForecastChart.com's proprietary long term stock market indicator. |
56 (NASDAQ Low)
47 (Inflation Adjusted NASDAQ Low)
47 (Inflation Adjusted NASDAQ Low)
1085
4696
NASDAQ
| Secular Trend Indicator |
| Forecasts, charts and analysis... |
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