March 1, 2012 | In: General
The NASDAQ Hits the 3,000 Milestone
The NASDAQ yesterday briefly hit the 3,000 milestone, which is a major milestone not seen since November of 2000.
Let’s look at the NASDAQ chart for the past 20 years:
I think we all should cede to the fact that this is a solid proof that despite all the rumors and all the sayings and all the analysts’ opinions, the economy is doing well. But is it the good economy that lifted the NASDAQ, or is it Apple? Let’s see…
Each AAPL share has increased by a $139.18 since the beginning of the year (or 34.37%). Considering there are 932.37 million AAPL shares in the market, this means that Apple (which is a the top NASDAQ ingredient) alone has added 932,370,000 x $139.18 = $129,767,256,600 – about $130 billion to NASDAQ. The total value of the stock market (less than a year ago) is about $23.34 trillion, and that number is for both the NYSE and the NASDAQ, which means that $130 billion cannot be considered as a mere “change” when it comes to the the NASDAQ. So, we can safely say that the NASDAQ reached the 3,000 level because of Apple, and not because of the good and improving economy. But now the question is, will the NASDAQ sustain the 3,000 level (once it stops the flirting process and actually closes for everyday on one week above that level) – or – in other words – will the 3,000 level be a solid support level?
The answer lies in Apple’s upcoming products – both the iPhone 5 and the iPad 3. If both of them flop, then expect the NASDAQ to withdraw back to its normal, two-thousand-something level, for a long, long time. If, on the other hand, these two products prove to be hot sellers like their predecessors, then it’s very possible for the NASDAQ to break the 4,000 level before the end of the year – regardless of the performance of other companies.
But, how much should AAPL be in order for the NASDAQ to break above the 4,000 level? Well, let’s see: since the beginning of the year, AAPL went up about 35%, while the NASDAQ went up about 15%. So, when AAPL goes up by 1%, the NASDAQ goes up by 0.42%. In order to reach the 4,000 level, the NASDAQ has to go up by about 33%, which means that AAPL has to go up by 78%. So, considering a static market at all other levels, AAPL has to go up 78% or reach $968 ($32 shy of $1,000) in order for the NASDAQ to reach the 4,000 level. Is this a very hard achievement? I guess it is. Is it impossible? Well, I have learned that there is nothing impossible for Apple (I still think though that Apple is now growing because of its formal glory, and once investors and consumers start hating this company, then it’ll be the beginning of the end).
Regardless of everything, I think it’s a positive sign that the NASDAQ reached this level – and I hope that this move will restore investors’ confidence in the market (whether that confidence is rightfully earned or not is another story – because I think investors’ confidence should be based on the whole economy, and not just on one company).
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