Did the top in the S&P 500 in 2007, have anything in common with the 2000 top? Yes! In 2000 the S&P made a nominal new high near the first day of fall, as monthly momentum was creating lower highs. Once it broke support selling pressure increased. In 2007 the S&P made a nominal new high near the first day of fall, as monthly momentum was creating lower highs. Once it broke support selling pressure increased. Lately, the S&P made a nominal high near the first day of fall, as monthly momentum was creating lower highs. https://www.zerohedge.com/news/2018-10-11/stocks-smell-2000-2007-again
If you're gonna look for similarities, then you need to also point out the differences. The 10 year / 3 month yield curve inverted in July 2000 and in July 2006. It's nowhere near inverted now. When you have a correction without an inverted yield curve, the market eventually rebounds (eg, Oct 1987, summer 1998, and most recently, Feb 2018). Until the curve inverts, stocks won't smell like 2000 or 2007
Yep... It was sunny on Oct 3rd 2000, it also sunny on sep 15th 2007. On both days the clouds were exceptionally fluffy. Yesterday, it was also sunny and the clouds were fluffy. In fact, they were even more fluffier today than in those two days. Beware of the days when it is sunny with fluffy clouds! Seriously tho, as traders all we can do assess the markets, manage our risk and trade our plan. Everyday in the market is different. That's what makes it so fun (and challenging). Everyday is different and every puzzle is different.
Would not surprise to see a major correction. Reason? Often happens when the market mood is bullish, most traders are caught off guard and holding the bag. I was bullish until last night, the mayhem looks serious to me now. Australia has traded since and felt bullish, but me thinks a dead cat bounce, a dead cat on a hot tin roof, some scorching up ahead me thinks for the bulls.
2000 was the end of the tech boom, good companies had stratospheric valuations, mediocre companies had absurd valuations and fairly new IPO's (which seemed to come out every day) who were unprofitable and showed no evidence that they would ever be profitable had nose bleed valuations. It was the definition of bubble. 2007 saw major institutions with billions in mortgage paper on their balance sheets which proved to be largely water and threatened the world economy. Emergency infusions by central banks were required in an attempt to prevent a world depression. Today, stocks are largely over valued but the economy is good, earnings are good and unemployment is low. Rates are rising affecting the cost of capital and corporate growth plans. Could the market crash? It can do anything it wants but there is little similarity to 2000 and 2007.
This is only like the 10th or 15th time we've heard this since the '08 crash. Any 5%+ correction = "this looks just like the financial crisis/Dot-Com bust/Great Depression all over again!" One of these days the doomsayers will be right, but only because of the broken clock effect.
I'm not looking for different, or the same. I just read the markets and do my assessment on a day to day, week to week basis. I'm not stuck on my assessments because my assessment may change tomorrow. Just make the best possible trade given the current situation. =)