News Takes

Market Soars Into History

Let the news and headlines speak for themselves, but read them carefully, there’s a point to all of them:

“Techs are back with a big vengeance. People continue to chase momentum,” said Brian Conroy, head of listed trading at J.P. Morgan.

“It’s phenomenal,” said Charles Payne, head analyst at Wall Street Strategies. “We’re breaking all sorts of technical resistance levels like a hot knife through butter.”

Charles Lemonides, chief investment officer at M&R capital, told CNNfn that the day’s action could be the beginning of a broad market advance, countering the narrow gains seen only by the Nasdaq.

Paul Rabbitt, president of Rabbitt Analytics, told CNNfn’s Talking Stocks he sees the Nasdaq resuming its lead as investors chase the highest growth tech companies.

 “Inflation appears to be muted,” said Alan Ackerman, senior vice president at Fahnestock & Co. “The numbers support (the idea) that the economy is growing and inflation isn’t as big as concern as everybody seems to think that it is,” Robert Stein, senior economist at told CNNfn.

“Right now, it’s a search for names, just like it was in the Internet sector, where you started with the big-cap ones and then you went to the smaller- cap ones,” Hyman said

Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum, called the retail sales figures positive for equity investors.”The economy is still strong, earnings will be good, and that bodes well for the stock market,” Hyman said.

Earlier in the session, investors reacted favorably to a government report that suggested inflation remained in check. The U.S. producer price index (PPI), which measures inflation at the wholesale level, was flat in January, according to the Labor Department. The number was below the 0.1 percent gain economists forecast. In addition, the core rate, which excludes volatile food and energy prices, declined 0.2 percent.
  “This [the report] is confirmation that inflation remains well balanced,” said Patrick Dimick, senior U.S. economist at Warburg Dillon Read.

The Dow’s jump of more than 800 points in the last two sessions comes as investors fish for some of the cheapest of blue-chip stocks. The Dow’s rise began with the start of trading, when a tame rise in producer price data failed to confirm analysts’ worst fears about climbing inflation.

The Nasdaq’s quick ascent in recent weeks sent analysts scrambling to upwardly revise forecasts for the index. But the insatiable demand for technology shares has made a continued upward surge seem effortless and inevitable. “A lot of people are tired of hearing about the new economy vs. the old economy, but that’s where it comes down,” said Ralph Acampora of Prudential Securities.

‘Legitimate shift’

“If you’re an astute observer, your portfolio will reflect what’s new and exciting and dynamic. A lot of those are the companies that are in the Nasdaq.” “Our feeling is that the move towards new economy stocks is really going to be a long-run sustained process.

“It may ease off here and there, we may find the Nasdaq being a little overvalued at some point, but in general its the way of the future. This is a legitimate structural shift in the economy and it will continue.”

“I think the Intel number coming out looks wonderful,” Richard Plum, of Phoenix Partners told CNNfn’s Street Sweep. “That will give impetus for the techs to rally.”

While you may not recognize many of the names cited you may certainly recognize the sentiment and the action. All of these quotes, every single one of them, came from articles posted between January and March of 2000. Not a worry in sight. Chase tech. The economy is great, all is well, let’s upgrade.

I took quotes out of these articles and posted them here verbatim. You can check these articles for yourself here:

Dow hits record high

Nasdaq soars to record

Nasdaq sets record (again)

Dow soars into history

Nasdaq tops 5,000 mark

Good times. Of course non of these utterances and projections meant anything as the Nasdaq peaked in March of 2000 and then crashed:

But it was a time of unabated optimism and individual companies saw their stocks suddenly soar vertically and would rise over 10% overnight for any occasion. Upgrades, positive projections, so convinced were they to even add companies to the S&P 500 that has no business being there:

“JDS Uniphase is up 14 percent in Wednesday’s after-hours session following the announcement that the company will join the Standard & Poor’s 500 Index”.

Yea, companies that suddenly see their market caps explore higher toward $1,000 out of the blue will do that to sentiment. We see that now with $TSLA.

Whether it means anything remains to be seen. In 2000 it meant nothing:

14% JDS Uniphase rally on the inclusion in the S&P 500. And then it went to nothing. Well played.

But note it went from $200 to over $1000 in just a matter of months before that.

Look familiar?

Back then it was panic buy JDSU now it’s panic buy $TSLA.

Look, I recognize everybody is saying it’s different this time. After all this is sentiment right now:

But as we saw in 2000, sentiment can have little future predictive value. Just saying. Tread carefully.

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Categories: News Takes

7 replies »

  1. On another topic, in the US the CDC estimates this flu season has had 19 million people infected. 140,000 hospital admissions and 10,000 deaths as of last weekend.

  2. How much liquidity can the world actually endure? This insanity has been going on since the Fall of 1981…over 38 years of non-stop money print and of course will end beyond badly…

    • “How much liquidity can the world actually endure?”

      That has an easy answer: an infinite amount. And the only downside is….well let Von Mises explain it:

      “There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

  3. I had to post this, CNBC today:
    Stocks are surging in part because investors expect a central bank response to the coronavirus. There will be no end to the madness!

  4. tulips….tulips….tulips….I truly believe we live in the most insane financial evironment ever…and most people think this is totally normal. I experienced the 2000 tech bubble….today evreything is a bubble…and the FANGS are the new Tulips. Unbelievable.

    • You have been driving me nuts with your reference to tulips, then I looked it up and understand……tulips….. 🙂


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