Thursday March 26, 2015
No matter how long I look at these charts it is always difficult to mentally prepare for a violent reversal in mood. Since the NASD has re visited its big top from Year 2000, let's look back at what happened once that level was reached.
NASD Year 2000
Note that a double top occurred with the second high in late March, then as now!
In just two months, a whopping 1800 points vanished! This was clearly the onset of the realization that the dot.coms were counting down their burn days as they ran through IPO cash with no profits. But it speaks to how quickly a parabolic rise can reverse. The same thing happened at $800 gold and $50 silver in the 1981 top, and to oil in June 2008.
Today
Note that February in both time frames was a big up month, and the last hurrah. The media of course trumpeted the February 14% rise not bothering to draw this parallel.
We of course cannot project into the future. But we can see the market closed under the 34 bar moving average. In our update last weekend we showed that several of the big techs like Apple exhibited five waves up. Amazon and Tesla are still not making any money but have three digit valuations.
Here is the big picture as a reminder of just how quickly COMPQ 5000 came, and went. You might past this next to your computer monitor.
The entire move up and down from 1999's 2000 to 2001's 2000 was a mere 24 months. But one can see how the counter trend rally of mid year 2000 kept hope alive! That hope was erased in the Oct-Dec Fall 2000.
The Education Bubble
Sweet Briar College is closing. Other are likely to follow. But we are nowhere near the downsizing the larger state supported schools need to undertake.
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