Tuesday Outlook: Y2K Head Fake Redux?

Monday was a pretty slow day and investors are going to mark time, absent other market moving news, until the Fed makes its next decision.

The volume yesterday was ultra-light.


















Let’s face it; bulls have seized the tape with “the worst is behind us” line regarding financials and the credit crisis. From the WSJ was this quote attributed to T. Rowe Price portfolio manager Daniel Shackelford:

We established that the Fed was going to backstop the markets, keep things stable and slowly but surely nurse the markets back to health… risk-taking has come back in the market.

So, that’s the bullish spin.

And, things do look better, but hold on a second. Below is a chart of the QQQQ ETF during 2000. Note the sharp initial April drop followed by a strong rebound in August/September. Then bulls tried to bring markets back only to fail when indexes went into a 2 year free-fall. Please keep and remember this chart since in 2000 we had a tradable rally and perhaps this is just a repeat.
























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Comments

[Ames Tiedeman]

Nice charts. Thanks!

[syruppy]

Is it just the pattern you're looking at or re you seeing some comparisons today with the [I}dot-com bubble,[[/I] as follows:

"The [B]'dot-com bubble'[/B] (or sometimes the 'I.T. bubble') was a speculative bubble covering roughly 1995–2001 (with a climax on March 10th, 2000 with the NASDAQ peaking at 5132.52) during which stock markets in Western nations saw their value increase rapidly from growth in the new Internet sector and related fields. The period was marked by the founding (and, in many cases, spectacular failure) of a group of new Internet-based companies commonly referred to as dot-coms. A combination of rapidly increasing stock prices, individual speculation in stocks, and widely available venture capital created an exuberant environment in which many of these businesses dismissed standard business models, focusing on increasing market share at the expense of the bottom line. The bursting of the dot-com bubble marked the beginning of a relatively mild yet rather lengthy early 2000s recession in the developed world." (wiki)

I don't see that

[David Fry]

syruppy......it's just a pattern I see. But one must also remember that many dot.com companies were proven worthless just like a lot of mortgage securities that are the root of the current problem. Then there's real estate which isn't worthless......just worth less.

[nyka]

COOL IT WITH THE MUMBO, JUMBO GRAPHICS. WE'D PREFER A WELL-WRITTEN ANALYSIS TO SUPPORT YOUR MULTIPLE CHARTS.

[Corey Mendel]

nyka...Who's "WE" [all caps]? With all the contributing bloggers on SA, why don't you find one that fits your MOJO? I, for one, prefer Dave's charts and succint commentaries. So kindly move along and go post your comments elsewhere.

[User 25498]

Nyka, you are a newbie. Don't foist your ignorance upon us.

As all good Techies know: Fundamentals tell you WHY (But that could mean 6 months or 6 years from now; so they are worth less).

The "Mumbo Jumbo Graphs" tell you WHEN (what the trend looks like for tomorrow, not 6 months from now). Pls learn from it.

[300mph]

nyka, Cool it with the all caps. We'd prefer not to save our ears from your SHOUTING.

[davemcc3300]

FYI, nyka: I open David Fry's postings SPECIFICALLY FOR THE CHARTS (!!!) and his cryptic observations. I suspect you'd consider yourself a "fundamentalist", rather than a "technician". Me too. But no fundie should move without checking his techie side. All part of meaningful stock-picking.

(P.S. David Fry: keep up the great work!)