Diary Week 28:Is The Equity Market Finally Waking Up?

Both in the NASDAQ and the S&P we went into this year with shades of 1998-2000 in terms of the trends.

While the percentages may be different (NASDAQ Composite closed 1999 up 85% and 2023 up 43% while S&P closed 1999 up 20 % and 2023 Up 24%- probably because it has more tech stocks this time.)

We entered 2000 on a wave of DOTCOM Euphoria and continued higher on both indices. NQ1 Peaked on 24 March 2000 as did Es1. (This year so far those dates have been 21 March and 01 April respectively)

Back then everything looked ok and the Dotcom (Bubble) was in full flow, something that is reminiscent of AI now. The Fed even popped in more rate hikes in both March and again in May (50 bp's) taking rates to 6.5% driving real yields into the 4% area.

Unemployment at 4% was just off the cycle low (march 2000) and Q4 nominal growth in 1999 was 8.3%.

But the wheels were coming off and it was being reflected first in the equity market in March, then the bond market in May (2 and 5 year yield hits their trend highs) and finally the Employment picture in June when NFP printed just +11 k and then minus 108k in July (Actual prints not revisions)

Back then the Fed waited until Jan 2001 to respond when the S&P and NASDAQ were already in freefall.

All the equity markets look fragile but it is ES1 that has the most clear technical warnings

..................(As stated previously, going forward you will need to be a client of R J O'Brien or a paid subscriber to receive this full content.)

Best

FITZ

([email protected])