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- Jun 20, 2018
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First of all, let me give you may credentials regarding the Stock Market. I started in the business in 1977 as a trader in the commodities market. I then shifted to trading stocks in 1984. I worked for Merrill Lynch, Prudential-Bache and Dean Witter and was a broker/analyst. I was even one of the official tech analysts while at Prudential-Bache, giving technical advice on the markets.
I left the industry in 1988 to form a company with my ex-wife that was not associated with the market at all. We were very successful but that finished in 1998 when we got divorced. In 2005 I started trading again and since 2007 I have been offering a chart service to investors that is based on Charts and Moving Averages. With that service, I have shown a net result at the end of the year of a 67% return on investment. I have also shown 9 profitable years and only 2 losing years.
I am a trader and everything I do in the market is based on charts. I do not look at the fundamentals, believing that the charts reflect what the people-in-the-know are doing. I follow the money because those people know more fundamentals than I do and the charts usually reflect what is likely to happen.
Having said that, this thread is about the market being about as high as it can go. Just last month AAPL reached a valuation of over $1 trillion dollars and that has never happened before in the history of the market. In addition, AMZN has a PE ratio of over 325 and considering that what is normal are PE ratios of about 15, it can be considered hugely overpriced.
The NASDAQ and the Tech Sector have been leading the way, much like the Dot.com era did in 1999. The NAZ has gone up from 1265 to this week's high at 8119, much like it did between 1987 and 2000 when it went from 228 to 5132.
The economy is doing well and the tax cuts and deregulation that occurred under Trump has made the market continue higher.
Today, I checked on what was the reason that the NAZ collapsed in the year 2000, having gone from 5132 to 3042 in just 8 weeks and I was surprised to find that it was not bad news that caused the drop but the opposite......good news. Here is the explanation I got from a Google search regarding the fall in the year 2000:
"The Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday. Friday's plunge came after the government said prices at the consumer level showed surprising strength last month, triggering fears that the Federal Reserve may raise interest rates more aggressively".
This doesn't seem to be a potential problem right now given that inflation is where the Fed wants it to be and it is unlikely they will be aggressive in raising rates. So what could be the trigger for a fall now? It is without a doubt the Trade War. Trade Wars are never positive for the market but right now the traders have been ignoring it given that it started only 2 months ago and no official feedback of the negatives have come out. Nonetheless, next week the ISM Index and Jobs reports come out and it is said the Tariffs have been causing job loss and if that starts to be reflected in the numbers, it could be the trigger for profit taking and a domino-like down move.
Comments welcome
I left the industry in 1988 to form a company with my ex-wife that was not associated with the market at all. We were very successful but that finished in 1998 when we got divorced. In 2005 I started trading again and since 2007 I have been offering a chart service to investors that is based on Charts and Moving Averages. With that service, I have shown a net result at the end of the year of a 67% return on investment. I have also shown 9 profitable years and only 2 losing years.
I am a trader and everything I do in the market is based on charts. I do not look at the fundamentals, believing that the charts reflect what the people-in-the-know are doing. I follow the money because those people know more fundamentals than I do and the charts usually reflect what is likely to happen.
Having said that, this thread is about the market being about as high as it can go. Just last month AAPL reached a valuation of over $1 trillion dollars and that has never happened before in the history of the market. In addition, AMZN has a PE ratio of over 325 and considering that what is normal are PE ratios of about 15, it can be considered hugely overpriced.
The NASDAQ and the Tech Sector have been leading the way, much like the Dot.com era did in 1999. The NAZ has gone up from 1265 to this week's high at 8119, much like it did between 1987 and 2000 when it went from 228 to 5132.
The economy is doing well and the tax cuts and deregulation that occurred under Trump has made the market continue higher.
Today, I checked on what was the reason that the NAZ collapsed in the year 2000, having gone from 5132 to 3042 in just 8 weeks and I was surprised to find that it was not bad news that caused the drop but the opposite......good news. Here is the explanation I got from a Google search regarding the fall in the year 2000:
"The Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday. Friday's plunge came after the government said prices at the consumer level showed surprising strength last month, triggering fears that the Federal Reserve may raise interest rates more aggressively".
This doesn't seem to be a potential problem right now given that inflation is where the Fed wants it to be and it is unlikely they will be aggressive in raising rates. So what could be the trigger for a fall now? It is without a doubt the Trade War. Trade Wars are never positive for the market but right now the traders have been ignoring it given that it started only 2 months ago and no official feedback of the negatives have come out. Nonetheless, next week the ISM Index and Jobs reports come out and it is said the Tariffs have been causing job loss and if that starts to be reflected in the numbers, it could be the trigger for profit taking and a domino-like down move.
Comments welcome
If you keep piling grains of sand, eventually you'll start a chain reaction and get a cascade. Which grain will cause it is anyone's guess. Personally, my vote goes to the tens of trillions of dollars worth of debt that's fueled speculation in assets such as real estate and stocks, thanks to cheap money. We didn't learn our lesson from the last crisis. I mean, the average car now sells for more than $36,000, with car payments of over $500 per month for five or six years. What happens to auto sales when the cost of financing goes up? Presumably, they go down. And how about home values? Do trees grow to the sky? It's starting to look that way to some people. Do incomes grow to the sky, too? I haven't seen that yet, at least among the mortals. Most of us manage to live as we've done for the past couple of decades--on $60k a year or thereabouts.