As I listened to the gushing over Amazon (AMZN) during Wednesday's market, I was reminded of Christmas week 1999. I remember it like it was yesterday because I was living in Singapore at the time and was back in the U.S. for the holidays with everyone anticipating Y2K and what might be. In early January 2000, I recall sitting next to some lady on a plane who kept raving to me how Nasdaq was up 80% in 1999, like she was mesmerized. (Amazon is part of TheStreet's Growth Seeker portfolio.)
While that sort of sentiment and public participation and giddiness is absent from this market, I do recall turning on the television to watch CNBC's Squawk Box in late December 1999 to see that Qualcomm (QCOM) had been upgraded with some enormous price target (was it $1,000?). The announcer kept repeating Qualcomm in a deep voice every few minutes.
Of course, this caused me to go back and take a look at what Qualcomm's chart looked like in late 1999 as it headed into that early January peak. You can see the upgrade gap up in those final days of 1999. What struck me, though, was that Qualcomm was up over 250% from October to that peak in early January. Wow. Yet look at the chart and you have to admit it looks vaguely familiar.
It looks somewhat familiar because that steady rise of higher highs and higher lows with plateaus (resting periods) in between is exactly what Amazon has done over the past year.
Just as I didn't know when Qualcomm would end, I don't know when Amazon will end. But I do know that in late 1999 we had a narrow market that was focused on a handful of stocks, much the same way we have now. I think the late '90s were different because, as we see from the Qualcomm chart, the percentage moves were off the charts. Qualcomm rallied over 250% in three months! So we cannot compare apples to apples. But that doesn't mean this concentration in a handful of stocks is healthy.
I kept thinking we'd see a rally before we came down, but it seems the only place we're seeing rallies is in the Nifty Nine; everything else is left to dribble lower or languish. In fact, the poor breadth has caused the Oscillator to head toward an oversold condition. It's not quite there yet, but give it a few more days and it will be.
How is this possible, you wonder? It's easy when so many stocks go down every day. In fact, the number of stocks making new lows seems to expand daily now. Both the NYSE and Nasdaq had nearly 120 stocks make new lows on Wednesday. For Nasdaq, where supposedly all the positive action is, that is the highest reading since we saw 200 new lows on Oct. 2.
What does it say about a market that can't even have a failing rally?
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