As strong as this Bull Market has been, there are some interesting differences between what we are seeing now and what happened during the Dot Com Bubble of the late 1990’s.
The key difference is that the market fundamentals were actually better back then, much better! I remember many commentators during the Dot Com Rally warning that the fundamentals at that time did not justify price levels. There were others that shushed them, saying “we are in a new economy now.” I was in Business School, getting my MBA, at the time and we discussed the idea of a “New Economy” at length. About the time I graduated, the bubble burst and proved that maybe, just maybe fundamentals do matter.
The fundamentals of this market level are worse that they were during the Dot Com Bubble. In the video version of this update, I quickly review a table comparing key economic measures of then and now and the differences are pretty stark.
That doesn’t mean I am calling for a crash at any moment. The market is going up and I am predominantly long and making nice profit. But, I am watching carefully for signs and proof of when the market does eventually turn down. We cannot predict the exact high of a market (or the low for that matter) but we can determine when the trend has changed. When it changes, there is plenty of time to begin trading the new trend direction. I will continue to watch this and I will let you know when it happens.
Gold is pulling back just a bit, but it looks like that is just normal price movement in an ongoing up trend and I expect more highs to come in Gold over the next several weeks.
Oil is currently going nowhere. Until it breaks out of the channel that it has been in for a few months now, it is untradeable.
That’s it for this week. I look forward to continuing to give updates “Beyond the Noise.”
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