Crossing Wall Street has a very interesting set of data for how were’re doing this Century (as of the 17th):
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Here’s a rundown of some major indexes since December 31, 1999: |
Here’s how the 10 S&P 500 Industry Sectors have fared: |
| S&P 600 Small-Cap Value…………129.84% | Energy……………………………………..128.23% |
| S&P 600 Small-Cap………………….115.01% | Financials…………………………………..52.87% |
| S&P 400 Mid-Cap Value……………109.02% | Materials……………………………………50.94% |
| S&P 600 Small-Cap Growth……….98.15% | Utilities……………………………………..46.96% |
| S&P 400 Mid-Cap………………………97.07% | Staples……………………………………..34.99% |
| S&P 400 Mid-Cap Growth…………..84.92% | Healthcare…………………………………27.57% |
| Dow Utilities……………………………..82.35% | Industrials…………………………………20.99% |
| Dow Transports…………………………70.70% | Discretionary……………………………….3.97% |
| Morgan Stanley Cyclical……………..68.33% | Telecom……………………………………-48.75% |
| Russell 2000……………………………..64.23% | Tech………………………………………..-54.70% |
| Morgan Stanley Consumer………….36.02% | |
| S&P 500 Value………………………….29.95% | |
| Dow………………………………………….11.10% (29.03% w/divs) | |
| Russell 3000………………………………8.19% | |
| Wilshire 5000…………………………….7.95% (20.49% w/divs) | |
| Russell 1000………………………………4.60% | |
| S&P 500…………………………………….0.15% | |
| S&P 100………………………………….-15.04% | |
| S&P 500 Growth………………………-23.75% | |
| Nasdaq…………………………………….-38.15% | |
| Nasdaq 100……………………………..-50.51% |
This is in line with what HappyTrading and I were discussing this weekend, what would constitute a Nasdaq breakout? While you will often hear people say "Oh that’s nothing, the Nasdaq was up at 5,000 in 2000" but what they fail to remember is that it was up there for about 2 weeks (March) and quickly fell back to 4,850. In fact the entire "spike" of the dot com bubble in tech, the entire time the Nasdaq spent above 3,000, was 13 months – fom November 1999 to November of 2000.
Since we know the Nasdaq was tech heavy and companies were getting insane valuations which dragged up the index, why do we now blame Microsoft for the madness of Pets.com or Webvan? Joe DiMaggio had a 56-game hitting streak in 1941 but he didn’t play under a black cloud for not repeating it over the next 12 years of his career. So let’s stop treating the aberration as the norm and consider that we are, RIGHT NOW on the verge of a major breakout of all the indices, INCLUDING THE NASDAQ.
I’m hearing a lot of negative punditry out there and I’m as worried about the underlying economy as the next guy but the reality is that (and Barron’s now agrees with me) there is a global party going on and, while we weren’t exactly invited, it is right next door and we are able to sneak in and get a few free beers. Or, to put it in Barron’s stockspeak: "THE REST OF THE WORLD IS CARRYING THE U.S. STOCK MARKET. Fast-galloping overseas economies, flush world capital markets and a sagging dollar fatten multinationals’ earnings and furnish the fuel for commodity-related stocks to surge." Nothing I haven’t been saying all Quarter but it’s nice to win some converts…
So our new Nasdaq breakout is going to be 3,000 and I’m expecting to see 2,900 BEFORE my Dow 15,000 target (next June). We still need the SOX to get it in gear or we may get dragged into a pullback but we are very close to escaping the pull of gravity and old-fashioned market logic may no longer apply. While volume is drying up a bit and short buying is increasing, it may just add fuel to the fire if we can just break out of our last few levels (more on that tomorrow).
Larry MacDonald has a nice collection of bullish and bearish articles that will leave you totally confused if you read them all but very happy if you just choose to read your own side of the line. Michael Kahn has a much more bearish outlook, stating "what goes up must take a breather." Another Barron’s writer who must be reading us is Randall Forsyth who is buying into my thesis that the declining dollar is at the root of this rally – that’s a theory that will likely be tested this week as a new round of global unrest should put a floor on the dollar, as will robust corporate earnings.
So will we get our breakout or my long-expected correction. I’ve found it’s better not to guess as fundamentals have nothing to do with market movement so we will continue to make new charts and just "go with the flow" riding this particular wave until it crests and then laying down some cozy mattress plays
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