Thursday’s session had the makings of the start of a classic pullback, but instead, it turned into the classic buy signal. Major equity indices were down early in the session on disappointing earnings news, only to reverse course and surge through huge resistance points and reach new all-time highs, at least for the Russell 2000, S&P 500, and NASDAQ.
I was ready to raise cash, but now I’m raising targets.
NASDAQ: 15 Years Later
Yesterday, I went to the NASDAQ building in Times Square as a backdrop to discuss the index reaching a new all-time high more than 15 years after its previous peak. Inside the building, there was a lot of excitement and loud noise, but outside… no one cared.
In fact, the most eventful thing that happened was a guy dressed up like Elmo posing for a photo.
There were a lot of things that were different this time than back in 2000, but the lack of enthusiasm really stood out. There was no stock market mania. In fact, most of the noise yesterday came from angry bears and those calling for the end of the world.
The other thing that stood out was valuations. It was not even close to the kind of nosebleed stuff that had everyone thinking there were no limits.
Even though NASDAQ is getting all the press and the new leaders in the index, the stock that made this session big was International Business Machines Corporation (IBM). Old Big Blue took off and the broad market, which was struggling, grabbed on for the ride. It’s been a long time since IBM has led the charge.
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An old stodgy name changing hands at a 14x price/earnings (PE) was the winner yesterday, but today it is going to be these new names: Google (GOOG & GOOGL), Amazon (AMZN), Starbucks (SBUX), and Microsoft (MSFT).
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