Echoes of 1999

 | Feb 20, 2014 | 7:30 AM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:










Originally, I had intended to write today's column about how my market indicators -- the ones on which I've relied for 30-plus years -- worked wonderfully on Wednesday. However, when I saw that Facebook (FB) had agreed to buy WhatsApp for $19 billion in cash and stock, my mind tumbled back in time to 1999.

I am not a fundamental analyst, so let's be clear on this: I do not discuss valuation. I do not discuss earnings. I don't even discuss the company's products. I look at charts -- and as I stare at the charts of stocks such as Facebook and compare them with those of such companies as Coca-Cola (KO) and Pepsico (PEP), I find myself taking a trip down memory lane.

Below is Coke's chart from February 1999 to February 2000, as I wanted to include January 2000 -- and let's all stop and recall that the Nasdaq rose something like 80% in 1999. Coke, from a June high of $26, sank 30% to an October low of $18. It had started to recover by the time year-end rolled around, but not by much.

Coca-Cola (KO) -- Daily, 1999

Pepsi did not fare much better in that time frame: an August high of $32 to an October low of just under $24, for a drop of around 25%.

Pepsico (PEP) -- Daily, 1999

Now let's look at what was a fan favorite in 1999: Qualcomm (QCOM). If my eyes don't deceive me, that stock went from $3 to $90. It corrected in February 2000 -- to $50! These days, the stock is trading around $75, which means if you had bought at the high, you are still not back to even.

Qualcomm (QCOM) -- Daily, 1999

Another favorite stock from back then, as I recall, was NetApp (NTAP). These shares went from $10 to $60 -- and the stock is now 40. We're talking 14 years later, folks.

NetApp (NTAP) -- Daily, 1999

Why am I taking this trip down memory lane? Have you seen the charts of Coke lately? Pepsi?

Coca-Cola (KO) Daily, Present

Coke and Pepsi have their issues, of course, and many of the other consumer-product names are performing just as well. But there's currently a wide disparity between the stocks of companies that produce food and drink vs. technology names. In fact, the last time I remember the gulf being this wide in 1999. If we start to hear "old economy-new economy" in the coming days, we'll know things have gotten out of hand.

In the meantime, the banks are doing terribly: The KBW Bank Index (BKX) has underperformed since the early February low. The BKX-S&P 500 ratio is now flirting with the November lows.

BKX vs. S&P 500

Meanwhile, the BKX itself has the same pattern as the Dow Jones Transportation Average, which we discussed yesterday -- the big head-and-shoulders top, and the potential for a tiny bottom. The next few days will be make-or-break for this group.


Meanwhile, if you are wondering how the banks fared in 1999 -- well, you can see they didn't exactly participate in the fun then, either.

JPMorgan Chase (JPM) -- Daily, 1999


 Overbought/Oversold Oscillator -- NYSE

 Overbought/Oversold Oscillator -- Nasdaq

In Top Stocks, Helene puts her 20+ years of experience in technical analysis to work for you. Take advantage of Helene's time-proven approach and her action-oriented analysis of technical indicators. Try it now. Get a 14-Day Free Trial.

Columnist Conversations

today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
View Chart »  View in New Window »



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.