Dollar/SPY (intra-day)
That pretty much says it all. The dollar fell hard and the indices ripped higher. Breadth went from horrid to terrific. If you slept in today, long equities, you woke up to more of the same. Unbeknownst to you, AAPL was down 15 at the bell. Here is my specific issue with chasing this rally:
The market is going up on the back of technology shares. Agreed? For the most part, oil and banks have been quiet to weak. There has been strength in the industrial names. But, for the most part, tech has stolen the show.
SYMBOL FPE P/S
BIDU 49.00 55.00
VMW 38.00 18.00
ARMH 24.00 17.00
FFIV 20.00 13.00
AMT 49.00 12.00
CRM 75.00 12.00
AKAM 15.00 11.00
RHT 35.00 10.00
CTXS 20.00 8.00
MELI 44.00 19.00
CAVM 54.00 13.00
APKT 25.00 17.00
NETL 23.00 10.00
ARUN 23.00 10.00
Essentially, if I was to buy into nasdaq related stocks now, I will be ignoring the lessons learned 10 years ago, during the dot com bubble of 2000. Am I exaggerating? Absolutely not. Unlike 1999-2000, this economy cannot support those exorbitant valuations. You cannot make gold from shit, no matter how hard you try. We are priced for perfection. Should we deviate from perfection, you will see the floor removed from bids and share prices will plummet.
When will this happen?
No idea. I read some report, from the blowhards at Goldman, calling for S&P 740 by 2011. To me, that’s fucking laughable, on a hysterical trend. But, it’s worth noting, Wall Street is hurting right now. I know you are seeing something different. But, where this shit all starts, people are about to lose their jobs again. What Wall Street needs are some frothy ipo’s, in order to showcase our shit to the public again. It’s not surprising to read Joe Public has pulled all of his money out of the stock market, in exchange for the mattress. This shit is too hard, unless of course you have the proclivity to be one directional in nature. I mean, if you are permanently bullish, you are absolutely killing the market right now. On the flipside of that coin, those same people will end up bearing the brunt of the future pullback, if that shit ever happens.
At the end of the day, clearing all the smoke and shattering all of the mirrors, I am simply asking for better valuations, before allocating fresh capital. Is that too much to ask? What would my excuse be, if the market suddenly dropped 1,000 points from current levels, caught long the above stocks? I suppose I could tell my clients “hey, those stocks were awesome, just prior to their demise.” The bottom line, as much as it pains me to miss out on the fun, I have a fiduciary responsibility to be cautious, when valuations get out of whack. Moreover, with year to date gains close to 28% (down from 40%), I am better off waiting, than playing with the proverbial nuclear tipped Jack in the Box.
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