Looking at the long term performance of the Nasdaq Index we see that during the last two biggest drops, the Index was significantly away from its 200 MA. During the Dot.Com Bubble the indicator was 4.5 times above the 200 MA and dropped 75% in 2.5 years. During the Sub-prime Crisis the indicator was 1.7 times above the 200 MA and dropped 50% in about 1.5 years. Currently the Nasdaq is quite far away from its 200 MA (2.5 times) after an extended period of almost 10 years. Even though the indicator can continue its upward trend, it is worth keeping an eye open on a possible long-term correction. As we now, indexes tend to return to the 200 MA in the long run.
If we look at the Squeeze Momentum (SQZMOM) Indicator at the bottom of the chart, we see that before the two prior big drops, the SQZMOM Indicator showed three green waves. Currently, the third green wave appears to be reaching the top, so this is another reason to be alert.
Maybe it is too early to conclude. However, for now the next target price should be around the 50 month MA at 5500. If this point of control is broken, then we may adjust the target price to the 200 MA. Meanwhile we can take controlled short positions coupled with stop losses or call options to limit losses if the market actually goes up. Lets keep alert!