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Monday, October 28, 2013

Kirk's Irrational Exuberance & Pessimism Chart for the NASDAQ

Below is my chart of NASDAQ Index trend lines with "Irrational Exuberance" & "Irrational Pessimism" charted from 1980 through today. This is an update of a chart I posted three months ago (July 21 Chart) when the NASDAQ was just touching the resistance line. This month the NASDAQ moved above this 5-year resistance line that could now become support.
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More NASDAQ Charts
In this new graph, I added an orange Andrew's pitchfork. Will the NASDAQ surge to the center tine or correct back to the lower tine of the pitchfork?

Note from the chart
  • How crossing the lower dashed-blue line often marks a point of acceleration.
  • And note how the purple resistance turned support line from the contracting triangle has ALREADY been tested from above.
My New Term "QE Forever"

What happens if the Fed never tapers its purchase of US treasuries and mortgage backed securities or worse, increases its purchase to fund government overspending?

"QE Forever" is the way they figured how to tax savers a couple of percent a year and not call it a tax.

My guess "QE Forever" would give massive asset price inflation without "official inflation" as wages would remain low.  Investors with cash would continue to seek assets that have some sort of real return, such as stocks that can increase dividends and real estate that can charge more for rent. 

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