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Barring some kind of major reversal, the Nasdaq 100 is on course for its highest monthly close in history. This is good news for the tech index, since momentum tends to beget momentum, but also for stock markets more broadly. On balance over the past 40 years, when the Nasdaq makes a new high, the other US markets tend to follow.
It does not take a charting genius to see the chart below is one that remains firmly in an uptrend. While it seemed ominous at the time, the sell-off in January and February provided one of the best buying opportunities in the index for a long time. In contrast to the small ‘mid-season sales’ of 2017, when a 2%, 3% or even 4% was all that could be hoped for, the 12% correction was a bonanza for those looking to buy low and sell high.
Indeed the sell-off was rapidly followed by a new record high in March, breaking above the January one, and while a sell-off soon followed, this was a higher low, followed by yet another higher low at the end of April.
Recently we looked at the reasons why the US market was not poised to enter a bear market. This remains the case. The new all-time high sends yet another clear message that stocks are still exhibiting strong momentum. Dips should remain buying opportunities, although they may not be quite as generous as the January and March sell-offs.