Its beginning to look like the early 2000s
WTI crude reached a high of USD130.50 in Mar 2022 after the Russia- Ukraine war started. Then it fell to a low of USD64.12 on the back of the banking crisis and recession fear about 2 weeks ago. That's a fall of 50.9%. It's the surest sign that the oil market is factoring in a recession.
In 2023, the Nasdaq had its best January opening since 2001 with a 10.7% gain. That's after plunging 33.1% in 2022. In 2001, there were 4 occasions (monthly gains of 10% or more) and the Nasdaq was lower one year later after all 4 of them. This is shown in Fig. 2.
More details below:
Fast forward to Apr 1, 2023. The Nasdaq 100 has entered a new bull market in Q1 and rose 20.8% from its Dec 28 low. The market breath is narrow with just 10 stocks of Nasdaq 100 driving 88% of the gains. These big tech stocks are Apple, Microsoft, Meta, Amazon, Alphabet, AMD, ASML, Broadcom, Tesla, Nvidia. The top performing tech stocks are as follows:
1. Nvidia 90%
2. Meta Platforms 76%
3. Tesla 68.4%
4. Warner Bros. Discovery 59.3
5. Align Technology 58.4%
Apple and Amazon were also up more than 20%. Nvidia is about to post its best quarter since 4Q2001, when it soared 144%. That monster rally began in the midst of a U.S recession and a bear market in the Nasdaq that spanned 3 years. The following year in 2002, Nvidia would go on to crash 90% (top to bottom) before finding its footing in Oct.
Tech stocks are leading the rally just like 2001. We all know that the Dot-com bubble burst in 2001. This time it may be the AI bubble. AI is a very important technology but it may be overhyped now with Nvidia having gained 90% and Meta 76%. Some other AI stocks have gained a few hundred percent. They are overvalued with the AI hype pricing them too far in the future.
Morgan Stanley strategists said in a report, noting that earnings estimates were 15-20% too high even "before the recent banking events."
The benchmark S&P 500 posted a 7% gain for the first quarter, rebounding after a nearly 20% drop in 2022. Strip out Meta, Amazon, Apple, Microsoft and Alphabet, and S&P would have been flat.
Equity valuations remain elevated by historical standards, with the S&P 500 trading at about 18 times forward earnings estimates compared to its long-term average P/E of 15.6 times, according to Refinitiv Datastream.
S&P 500 earnings for the first quarter are estimated to have fallen 5% from the prior year, followed by an expected 3.9% drop in the second quarter, Refinitiv data shows. During recessions, however, earnings tumble at a 24% annual rate on average, according to Ned Davis Research.
Current valuations show investors have not priced in a recession at all. This is in contrast to oil prices.
The stock market is factoring in rate cuts this year so there will be a soft landing and stocks will be propped up. But inflation may rise later this year on China's reopening. The Fed would have to continue hiking rates. Taming high inflation is its priority.
Is the bear market over? The rally is not broad based and is unsubstainable. I fear 2001 is going to occur all over again. Remember no bear market has ever bottomed before a recession happened.
$Crude Oil Futures(JUN4)(CLmain.US$ $Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$ $S&P 500 Index(.SPX.US$ $Ethereum(ETH.CC$ $Invesco QQQ Trust(QQQ.US$ $CSI 300 Index(000300.SH$ $Hang Seng Index(800000.HK$ $TENCENT(00700.HK$ $Tencent(TCEHY.US$ $Alibaba(BABA.US$ $BABA-SW(09988.HK$ $Bilibili(BILI.US$ $PDD Holdings(PDD.US$ $BYD COMPANY(01211.HK$ $BYD Co.(BYDDF.US$ $Baidu(BIDU.US$ $BIDU-SW(09888.HK$ $JD.com(JD.US$ $MEITUAN-W(03690.HK$ $Occidental Petroleum(OXY.US$ $Chevron(CVX.US$ $Hewlett Packard Enterprise(HPE.US$ $Intel(INTC.US$ $NVIDIA(NVDA.US$ $Advanced Micro Devices(AMD.US$ $Meta Platforms(META.US$ $Alphabet-C(GOOG.US$ $Alphabet-A(GOOGL.US$ $Microsoft(MSFT.US$ $Tesla(TSLA.US$ $Ford Motor(F.US$ $Apple(AAPL.US$ $AEM SGD(AWX.SG$ $Rex Intl(5WH.SG$ $RH PetroGas(T13.SG$ $Geo Energy Res(RE4.SG$ $Golden Energy(AUE.SG$ $Occidental Petroleum(OXY.US$
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Taurus27 : That is a very good information! Thank you !
Momentum Trader : Good reminder especially the last sentence, while the market is getting hot again.
East America Taurus27: The current market news is just the opposite. The positive side has instead declined; the bad guys have drivers
70189466 : No bear market under the water
readme1221 : If you take time off, you honestly admit that you've taken off. It's still 2001, why aren't you compared to the Great Depression?
Charleneee readme1221: Ah Tiong, if u Boey song u can don read. People spend so much time to analyse, not for u to gong dang gong sai
bullrider_21OP Taurus27: You're welcome.
bullrider_21OP Momentum Trader: There will be some rallies during the bear market.
bullrider_21OP readme1221: Because there are some similarities compared to the Dot-com Bust. Fell last year, rise in Jan and fall next year. Tech stock are also leading the rally this year. There may be some rallies of >10%, but may still fall next year.
readme1221 Charleneee: You worked hard, but all you put out was a fart
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