Market talk of a bubble and possible 2000-style crash is rampant with the Nasdaq hovering around the 5000 level, but investor worries are overblown as charts suggest the uptrend will continue.
Investors are an easily panicked group. The Nasdaq reached 5000 and suddenly investors are worried about a repeat of the tech-crash in 2000. There's something magical about a round number like 5000.
It's a false worry because the nature of the Nasdaq trend is very different from the trend in 2009. Furthermore, the leading stocks including Apple, Microsoft, Amazon, and Google have genuine revenue generating businesses. In 2000 many Nasdaq listed stocks had big dreams but no revenue.
In 2000 it was very clear that the very fast and strong momentum rise of 247 percent from 1475 to 5132 over seven months was unsustainable. Compare this with the Nasdaq trend starting March 2009, best seen on the monthly chart.
The Nasdaq index has risen 295 percent from 1265 in March 2009 to 5002 last week. The rise has taken has taken more than six years, not seven months. This is a steady and sustainable trend rise. The 5000 level is not important from a technical perspective. The chart-based technical target is near 5200 – a little higher than the Nasdaq peak of 5132 in March 2000.