It’s strange waking up to see the NASDAQ 100 futures down 100+ points. I quipped on Twitter the other day that the new norm was seeing them up 100+ every morning. Let’s keep this all in context. The index is up 4% over the past 5 days and 14% over the past month. It’s up 40% over the past 6 months. It’s been one helluva run! The Fab Five Plus stocks which make up a good portion of the index have been even stronger.
I have been looking for a pullback for some time. Eventually, one always comes and then it’s so obvious why it came. Since July I have written about the historic outperformance by the NASDAQ 100 over every other index. It’s been insanely crazy. However, as I keep mentioning, markets can stay irrational longer than anyone (except the Fed) can stay solvent fighting the trend.
Not fighting the trend doesn’t mean you have to jump on board either. I can’t tell you how many times I have been asked about buying Apple and Tesla. My answer has always been to wait for a pullback. Clearly, that’s been the wrong answer, but if I wouldn’t do it for myself and my family, I won’t suggest it to anyone else either. In fact, as I have written here, I thought it was a good idea to sell some shares in these two stocks because of the split. And that’s something I did do for clients who owned Apple.
Anyway, for the first time in at least a month, the bears will try to inflict some damage in the giddiest stocks and sectors. We shall see how the bulls react this afternoon. If the bull market in those mega tech stocks ended yesterday, I certainly will not be shocked. All the signs are there. However, I don’t think that will be the case. I remember saying and writing the exact same thing a number of times in late 1999 and early 2000. Heck, I was on Bloomberg TV in February 2000 calling for a 75% decline in the Dotcom stocks after turning negative months earlier. I lost a number of larger clients in late 1999 because I would not jump on the Dotcom bandwagon. All the signs kept pointing to an epic peak. It just took a lot longer than I ever imagined. I think today may be similar.
