Is This 2000 Redux? (In Miniature)

Discussion in 'Trading' started by Pabst, Aug 18, 2006.

  1. Pabst


    Remember the August stealth rally that went down in flames after Labor Day? Not only similar price action with Tech underperforming the Dow but also a restrictive Fed who was fooled by apparent asset strength. Me thinks the economy is slowing and we'll see an ease in Q1/07 as stocks erode.

    The catalyst? Perhaps the Dems do ok in November.
  2. LT701


    what was noticable about 2000 was that it was a unique event.

    everyone was trying to figure out what previous event it was like, but it was history in the making
  3. Pabst


    NDX in 2000 (without having a one DAY crash) was much like the '29 Dow. People seldom realize that the Dow had a 50% retracement back to the highs from Nov/29 to Mch/30. That was much like the summer 2000 rally where NDX came halfway back to the spring peak.

    Like I say in miniature I think we'll flip upside down the past few years tendency to rally hard Oct-Dec.
  4. I agree with you Pabst. I think there is a blow off top in the making then we see this market dump into september hard.

    Perhaps DOW 1000 point drop then some relief rally in October then continued drop from late December to early next year.
  5. As I recall, the NASDAQ had one helluva short-covering rally in tech during the month of August 2000.

    Names like JDSU, CSCO, and FDRY went absolutely ballistic and back up towards their old highs before failing.

    The QQQ opened at 89.81 before rallying hard and getting pinned for the week and month at 101.88 with a 102.00 high.

    Similarly, the COMP opened at 3760 before getting pinned at the highs of the week and month at 4206.

    That was almost a 12% jiyhad!!!

    In any event, the trend is your friend and it does not pay to try and FADE this current move in the equity markets, in my opinion.

    In fact, the COMP could very easily trade up to 2230 before running into some significant moving average resistance on the weekly and monthly charts. That area also happens to be a .618% retracement as well.

    Good Luck to All.
  6. Pabst


    It was one of the biggest one month rallies in history. And yea Landis, many tech stocks like JNPR, VeriSign, Sun also exploded that month.
  7. One thing that disturbs me about this economy and market is the fact that people are cheering the lack of inflation and rallying every time there is a possibility rates are done rising. IMO with the prices of commodities (oil in particular) going through the roof, how can anyone possibly explain why inflation isn't taking off as well. The only explanation I can find is that there is simply not enough money circulating around to pass on the increases. This is not bullish.

    Clearly the consumer is tapped and that is going to hit everyone's bottom line. How hard is the question. Market valuations are reasonable right now but only if earnings keep growing. The next earnings season will be the true test to the economy but when corps like Wally World are already having profit problems I think it's very telling.

    This definitely isn't 2000 but the potential underpinnings (deflation, dollar devaluation) are very disturbing. Much more risk to the downside here than the up.
  8. I read in SFO monthly that core inflation (less oil food etc..) is the main focus of the Feds because apparently, we don't need electricity, we don't drive our cars, and we don't eat :D

    So even as FOOD and ENERGY ($10 apples and $10 gas anyone?) keeps going up and the other things that truly matter dont go "inflating" we're gonna be just fine and market will keep going up.

    Tell you what, there hasn't been an opportunity for shorts to make this much money in a while. Wait til this bull run ends and you'll have your day in the sun :)
  9. You are being mistaken ( and perhaps a bit naive ) in thinking that inflation effects all sectors of the ECONOMY as a whole.

    Thus far, there has been little "inflation" in the service sector of our Economy . . . and as we all are very well aware, the U.S. Economy is no longer a manufacturing Economy, but is instead heavily weighted in "service" sector businesses . . . such as Banking, Information Technology, etc., just to name a few.

    I am not saying that there hasn't been any Inflation in the "service" sector. However, whatever inflation has occurred in that sector is rather small compared to what has been experienced in the manufacturing and industrial sector due to dramatic increases for raw materials . . . And since our Economy is so much more weighted to the "service" sector, the Inflation that you speak of is not as great as you would imply.

  10. Watching Kudlow, I'm getting a flashback of CNBC during the 1st quarter of year 2000...
    #10     Aug 18, 2006