Here’s why more Nasdaq highs could be on the horizon

The surging Nasdaq composite is set to rise even higher over the next year, according to one bullish technical analyst.

"We've now got the Dow, we've got the S&P and now we've got the Nasdaq making all-time new highs," Piper Jaffray technical analyst Craig Johnson said Tuesday on CNBC's "Power Lunch," referring to each major index hitting new all-time highs in recent weeks.

While the Nasdaq opened a bit lower on Wednesday, the tech-heavy index on Tuesday hit its first record intraday high in more than a year.

"It looks like we're making kind of a classic bottoming-type pattern — left shoulder, head, right shoulder. We broke it above the neckline," he said, referencing a five-year weekly Nasdaq chart.

Johnson said this so-called "head and shoulders pattern" suggests further gains.

"I see more upside to the Nasdaq," said Johnson, estimating a 12 percent rise from current levels over the next year.

The Nasdaq, which includes tech heavyweights like Amazon, Apple and Google parent company Alphabet, rallied on the back of a stronger-than-expected jobs report released on Friday.

Not everyone is as bullish on the index, however.

"You look at February bottom; who bought that bottom? Really, when you start to look at these institutions, more of them are selling now, volume's been light," Steve Grasso, director institutional sales at Stuart Frankel, said Tuesday on CNBC.

Though he does not believe that Johnson's forecast is unreasonable, he predicted that "you're going to see a sell-off before we get another 12 percent higher in the indexes," Grasso said.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more