More on Market Observations 05/17/06
Mike, an inquiring Naybob reader posts: "On that downturn the Nazdaq lost 14% in 6 days. This time around the Naz is only down 7% in the last 7 days. On top of that, the levels the Nazdaq was at that year were double what they are now."
What Mike sez is true for the NAZ, the degree of drop so far and the starting level are not the same. But, being at half the level and dropping half the distance may be relevant. Thank Mike for bringing this to our attention.
Watching the overall market behaviour and recognizing similiarities with the past, can give some clues as to possible future market reaction.
We have commented on this previously... The bubble is no longer in the NAZ, but in the MID and RUT. Look at a chart to see their climb to all time highs.
And with higher interest rates seemingly on the way, vis a vis Fed raises or a halt and resulting bond selloff and dollar drop. Either way, higher lending costs hurt the smaller fish the greatest, so that is where the real danger lies in this market.
Looking at a chart, and having previously noted these events, the recent downtrend for the NAZ started 04/21/06, the SOX 01/27/06 and NDX 01/11/06.
Tech in general begin to really cave around the SOX date, and has presaged and telegraphed the direction of the broader markets. We previously noted, the SOX was up 16% in late Jan, early Feb, now its hoping to break even.
Savvy investors who are cognizant of the stock options expensing issues, a buildup in inventory and lowered forward guidance (ie. future demand) over the last two reporting periods, have taken action.
Witness the RUT & MID over the last 5 days. Now, the focus has broadened, and investors are worried about rising interest rates, higher energy pass through stagflation, and the latent effects of $70-80 oil in the "guvmint's" inflation numbers.
After the rumored emergency G10 meeting last week, too much effort to rescue the dollar and bonds has resulted in the Bears coming out to play in the equities market.
What Mike sez is true for the NAZ, the degree of drop so far and the starting level are not the same. But, being at half the level and dropping half the distance may be relevant. Thank Mike for bringing this to our attention.
Watching the overall market behaviour and recognizing similiarities with the past, can give some clues as to possible future market reaction.
We have commented on this previously... The bubble is no longer in the NAZ, but in the MID and RUT. Look at a chart to see their climb to all time highs.
And with higher interest rates seemingly on the way, vis a vis Fed raises or a halt and resulting bond selloff and dollar drop. Either way, higher lending costs hurt the smaller fish the greatest, so that is where the real danger lies in this market.
Looking at a chart, and having previously noted these events, the recent downtrend for the NAZ started 04/21/06, the SOX 01/27/06 and NDX 01/11/06.
Tech in general begin to really cave around the SOX date, and has presaged and telegraphed the direction of the broader markets. We previously noted, the SOX was up 16% in late Jan, early Feb, now its hoping to break even.
Savvy investors who are cognizant of the stock options expensing issues, a buildup in inventory and lowered forward guidance (ie. future demand) over the last two reporting periods, have taken action.
Witness the RUT & MID over the last 5 days. Now, the focus has broadened, and investors are worried about rising interest rates, higher energy pass through stagflation, and the latent effects of $70-80 oil in the "guvmint's" inflation numbers.
After the rumored emergency G10 meeting last week, too much effort to rescue the dollar and bonds has resulted in the Bears coming out to play in the equities market.
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