SMM News: is history repeating itself? An "amazing" chart worries a Wall Street strategist about what happens next for U. S. stocks.
A chart by Michael Kramer, founder and portfolio manager of Mott Capital, shows that the current trend of the Nasdaq 100 index is highly similar to that of the Bubble era at the end of 1999.
"I find it amazing and shocking," Kramer told investors in a blog post. "by the way, I hope this is wrong."
Since the low triggered by the novel coronavirus epidemic in March, the Nasdaq 100th index has jumped 84 per cent in 163days. The index rose by about 86% in the 151 days since its peak in November 1999. The reasons for the violent rebound may vary widely, but in fact the trends of the two times are indeed very similar.
"I don't know, maybe it's just a coincidence, but it's still weird," Kramer wrote on his blog. "I think we will soon find out whether the similarities stop here."
The Nasdaq 100 index has recently fallen about 13% from its Sept. 2 high, below its 50-day moving average, and outperformed the s & p 500 for the first time in a year. However, Mike Wilson, chief US equity strategist at gen Stanley, believes that a deeper decline is likely to follow, and that the current decline has not yet wiped out the optimism that has emerged from the historic rally of the past few months.
The strategist believes that the index, which is dominated by technology stocks, could fall towards its 200-day moving average. The moving average is now close to 9528, 12 per cent below current levels and 23 per cent below the all-time high of 12421 set earlier this month.
"this happens when the stock market rises too much-when it is still on an upward trend, the correction is likely to be greater," Wilson wrote in a client note.